t.p. no. 1 of 2013 dated 20-06-2013

Determination of Tariff for Generation and Distribution – Order dated 20-06-2013

Tamil Nadu Electricity Regulatory Commission

TAMIL NADU ELECTRICITY REGULATORY

COMMISSION ----------------------------------------------------------------

Determination of Tariff for Generation and

Distribution

---------------------------------------------

T.P. No. 1 of 2013

Order dated: 20-06-2013

(effective from 21-06-2013)


TAMIL NADU ELECTRICITY REGULATORY COMMISSION

(Constituted under section 82 (1) of Electricity Act 2003)

(Central Act 36 of 2003)

PRESENT : Thiru. K.Venugopal – Member

Thiru. S.Nagalsamy – Member

T.P. No. 1 of 2013

Date of Order: 20-06-2013

In the matter of: Determination of Tariff for Generation and Distribution

In exercise of the powers conferred by clauses (a), (c),(d) of sub-section (1) of section 62 and

clause (a) of sub-section(1) of section 86 of the Electricity Act 2003, (Central Act 36 of 2003) and

all other powers hereunto enabling in that behalf and after considering the views of the State

Advisory Committee meeting held on 26.4.2013 and after considering suggestions and objections

received from the public during the Public hearings held on 03.05.2013, 08.05.2013, 10.05.2013,

and 17.05.2013, as per sub-section (3) of section 64 of the said Act, the Tamil Nadu Electricity

Regulatory Commission, hereby, passes this order for Generation and Distribution Tariff.

This Order shall take effect on and from the June 21, 2013.

Sd/- Sd/-

(S. Nagalsamy) (K.Venugopal)

Member Member



June 2013

TABLE OF CONTENTS

LIST OF ABBREVIATIONS ................................................................................................................................................... 6

A1: INTRODUCTION ........................................................................................................................................................... 7

PREAMBLE ......................................................................................................................................................... 7 TARIFF FILING ..................................................................................................................................................... 8

PROCEDURE ADOPTED ......................................................................................................................................... 8 TRANSFER SCHEME ............................................................................................................................................ 10

BRIEF NOTE ON TARIFF FILING AND PUBLIC HEARING ............................................................................................... 13

APPLICABILITY OF ORDER .................................................................................................................................... 15 LAYOUT OF THE ORDER ...................................................................................................................................... 15

APPROACH OF THE ORDER ................................................................................................................................... 16

A2: STAKEHOLDERS’ COMMENTS, TANGEDCO’S REPLY AND COMMISSION’S VIEW ......................................................... 18

1. GENERAL ISSUES ..................................................................................................................................... 18

2. DELAY IN FILING ...................................................................................................................................... 25

3. O&M EXPENSES..................................................................................................................................... 26

4. FUEL COST AND FPAC ............................................................................................................................. 27 5. GENERATION AND POWER PURCHASE ......................................................................................................... 29

6. AT&C LOSSES ........................................................................................................................................ 32

7. INTEREST EXPENSES ................................................................................................................................. 33 8. REGULATORY ASSET ................................................................................................................................ 35 9. CROSS SUBSIDY, COST TO SERVE AND AVERAGE COST OF SUPPLY ..................................................................... 41

10. MERIT ORDER DESPATCH ......................................................................................................................... 48

11. CROSS SUBSIDY SURCHARGE ..................................................................................................................... 51 12. SUBSIDY ................................................................................................................................................ 55

13. PEAK HOURS AND TIME SLOTS .................................................................................................................... 55

14. SOLAR PURCHASE OBLIGATION .................................................................................................................. 56

15. RENEWABLE POWER ................................................................................................................................ 56 16. EQUITABLE DISTRIBUTION OF POWER .......................................................................................................... 57

17. IMPACT OF THANE CYCLONE .................................................................................................................... 57 18. SALES ................................................................................................................................................... 58 19. TARIFF RELATED COMMENTS ..................................................................................................................... 58

a. Tariff for HT Industries ....................................................................................................................... 58

b. Tariff for HT Commercial .................................................................................................................... 59

c. Tariff for Agriculture and Hut services ............................................................................................... 59 d. Tariff for Streetlight and Water supply .............................................................................................. 61

e. Tariff for Domestic ............................................................................................................................. 61

f. Tariff for Tiny Industries ..................................................................................................................... 62

g. Tariff for LT Commercial ..................................................................................................................... 63 h. Tariff General ..................................................................................................................................... 63 i. Request for Separate Category .......................................................................................................... 65

20. CONSUMER ISSUES AND QUALITY OF SUPPLY ................................................................................................ 68 21. OBJECTIONS/SUGGESTIONS BY SOUTHERN RAILWAYS .................................................................................... 70

A3: FINAL TRUE-UP FOR FY 2010-11, PROVISIONAL TRUE-UP FOR FY 2011-12 AND ANNUAL PERFORMANCE REVIEW FOR

FY 2012-13 ................................................................................................................................................................ 75

ENERGY SALES – FY11 AND FY12 ........................................................................................................................ 75

Impact of Wheeling units and Cost – FY 2010-11 and FY 2011-12 .............................................................. 77

ENERGY SALES – FY 2012-13 ............................................................................................................................. 80 ENERGY AVAILABILITY ........................................................................................................................................ 85

Own Generation .......................................................................................................................................... 86

Power Purchase from other sources ............................................................................................................ 94 ENERGY BALANCE AND DISTRIBUTION LOSS .......................................................................................................... 104 FIXED EXPENSES .............................................................................................................................................. 106



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Operation and Maintenance Expenses ...................................................................................................... 106

Segregation of accounts ............................................................................................................................ 119

Capital Expenditure and capitalization ...................................................................................................... 121 Depreciation .............................................................................................................................................. 124

Interest on long term loans and other financing charges .......................................................................... 126

Return on Equity ........................................................................................................................................ 132

Interest on Working Capital ....................................................................................................................... 135 Other Debits............................................................................................................................................... 138

Prior Period Expenses ................................................................................................................................ 140 Demand Side Management ....................................................................................................................... 141 Contribution for Contingency reserves ...................................................................................................... 141

Summary of fixed Cost approved for Distribution function ....................................................................... 142

EXPENSES ON ACCOUNT OF GENERATION ............................................................................................................. 142

Capacity charges for own generating stations .......................................................................................... 143 Variable cost for own generating stations ................................................................................................ 151

POWER PURCHASE FROM OTHER SOURCES ........................................................................................................... 166

Central generating stations ....................................................................................................................... 166

Independent Power Producers ................................................................................................................... 170 Non conventional energy sources and Captive power plants .................................................................... 172 Power purchase from traders and other sources ...................................................................................... 174

Power Grid Corporation of India Limited (PGCIL) Charges ........................................................................ 176 Intrastate Transmission Charges ............................................................................................................... 177

AGGREGATE REVENUE REQUIREMENT AND REVENUE GAP FOR THE FIRST CONTROL PERIOD ........................................... 178

Non Tariff and Other Income ..................................................................................................................... 179

Estimation of additional power purchase cost due to higher T&D loss ..................................................... 179 Revenue from Sale of Power – FY 2010-11 and FY 2011-12 ...................................................................... 181

Revenue from Sale of Power – FY 2012-13 ................................................................................................ 182

Low Power Factor Surcharge ..................................................................................................................... 183 Revenue Gap for the first control period ................................................................................................... 184

A4: AGGREGATE REVENUE REQUIREMENT FOR THE SECOND CONTROL PERIOD – FY 2013-14 TO FY 2015-16 ................ 185

ENERGY SALES ................................................................................................................................................ 185

ENERGY AVAILABILITY ...................................................................................................................................... 192 Own Generation ........................................................................................................................................ 192

Power Purchase from other sources .......................................................................................................... 200 ENERGY BALANCE AND DISTRIBUTION LOSS .......................................................................................................... 210 FIXED EXPENSES .............................................................................................................................................. 212

Operation and Maintenance Expenses ...................................................................................................... 212

Capital Expenditure and capitalization ...................................................................................................... 219

Depreciation .............................................................................................................................................. 223 Interest on long term loans and other financing charges .......................................................................... 226

Return on Equity ........................................................................................................................................ 231

Interest on Working Capital ....................................................................................................................... 232

Other Debits............................................................................................................................................... 235 Contribution for Contingency reserves ...................................................................................................... 236 Summary of fixed Cost approved for Distribution business ....................................................................... 237

EXPENSES ON ACCOUNT OF GENERATION ............................................................................................................. 237 Capacity charges for own generating stations .......................................................................................... 238

Variable cost for own generating stations ................................................................................................ 245

POWER PURCHASE FROM OTHER SOURCES ........................................................................................................... 259

Central generating stations ....................................................................................................................... 259 Independent Power Producers ................................................................................................................... 262

Non conventional energy sources and Captive power plants .................................................................... 264

Power purchase from traders and other sources ...................................................................................... 265 Power Grid Corporation of India Limited (PGCIL) Charges ........................................................................ 267 Intrastate Transmission Charges ............................................................................................................... 267



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Merit order Dispatch ................................................................................................................................. 268

Summary of power purchase costs ............................................................................................................ 273

AGGREGATE REVENUE REQUIREMENT FOR THE SECOND CONTROL PERIOD .................................................................. 281 Non Tariff Income (NTI) and Other Income ............................................................................................... 282

Higher interest expenses due to abnormal Capitalization ......................................................................... 282

A5: ESTIMATION OF REVENUE GAP AND TARIFF DETERMINATION FOR FY 2013-14 ....................................................... 284

Revenue from Sale of Power –FY 2013-14 ................................................................................................. 284

REVENUE GAP AND DETERMINATION OF REGULATORY ASSET ................................................................................... 289

REVENUE ACCOUNT AND AMORTIZATION OF REGULATORY ASSET ............................................................................ 290

VOLTAGE WISE COST TO SERVE, AVERAGE COST OF SUPPLY AND CROSS SUBSIDY REDUCTION......................................... 294 Voltage wise cost to serve for FY 2013-14 ................................................................................................. 294

Embedded cost method ............................................................................................................................. 299

Voltage wise cost to serve ......................................................................................................................... 304 Average Cost of Supply and Cross subsidy reduction ................................................................................ 306

OPEN ACCESS CHARGES ................................................................................................................................... 308 Wheeling Charges ...................................................................................................................................... 308

Cross Subsidy Surcharge ............................................................................................................................ 309 Grid Availability Charges ........................................................................................................................... 313

Additional Surcharge ................................................................................................................................. 315

Restoration Charges .................................................................................................................................. 315

FUEL AND POWER PURCHASE COST ADJUSTMENT MECHANISM (FPCA) ...................................................................... 315 TARIFF RATIONALIZATION AND REVISION OF RETAIL SUPPLY TARIFFS ........................................................................... 317

PF Incentive................................................................................................................................................ 317

TOD Tariff .................................................................................................................................................. 318

A6: TARIFF SCHEDULE .................................................................................................................................................... 321

TARIFF FOR HIGH TENSION SUPPLY CONSUMERS ...................................................................................... 321

TARIFF FOR LOW TENSION SUPPLY CONSUMERS ....................................................................................... 327

A7: SUMMARY OF DIRECTIVES ...................................................................................................................................... 341



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List of Abbreviations

Abbreviation Description

A & G Administration and General Expenses

ABC Aerial Bunched Cables

ABR Average Billing Rate

APTEL Appellate Tribunal for Electricity

ARR Aggregate Revenue Requirement

CAGR Compounded Annual Growth Rate

CEA Central Electricity Authority

CERC Central Electricity Regulatory Commission

CFL Compact Fluorescent Lamps

CGS Central Generating Station

COS Cost of Supply

CPP Captive Power Plant

CSD Consumer Security Deposit

CWIP Capital Work in Progress

DA Dearness Allowance

EA Electricity Act

ED Electricity Duty

FRP Financial Restructuring Plan

FY Financial Year

GFA Gross Fixed Assets

G.O. Government Order

GPF General Provident Fund

GoTN Government of Tamil Nadu

HT High Tension

HVDS High Voltage Distribution System

kWh Kilo-watt Hour

LT Low Tension

LTOA Long Term Open Access

MU Million Units

MW Mega-watt

MYT Multi-Year Tariff

NTI Non Tariff Income

O & M Operation & Maintenance

PF Power Factor

PLF Plant Load Factor

R & M Repair & Maintenance

O & M Operation & Maintenance

RoE Return on Equity

SLDC State Load Despatch Centre

STOA Short Term Open Access

T&D Transmission & Distribution

TANGEDCO Tamil Nadu Generation and Distribution Corporation Ltd.

TANTRANSCO Tamil Nadu Transmission Corporation Ltd.

TNEB Tamil Nadu Electricity Board

TNERC Tamil Nadu Electricity Regulatory Commission

ToD Time of Day

TP Tariff Policy



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A1: INTRODUCTION

Preamble

1.1 Consequent to the enactment of the Electricity Regulatory Commissions Act 1998

(Central Act 14 of 1998), the Government of Tamil Nadu (GoTN) constituted the

Tamil Nadu Electricity Regulatory Commission (TNERC) vide G.O.Ms.No.58,

Energy (A1) Department, dated 17-03-1999.

1.2 The Commission issued its first tariff order (Order No 1 of 2002) under Section 29 of

the Electricity Regulatory Commission Act, 1998, on 15-03-2003 based on the

petition filed by the Tamil Nadu Electricity Board (TNEB) on 25-09-2002.

1.3 Electricity Regulatory Commission Act, 1998 was repealed and the Electricity Act

2003 (Central Act 36 of 2003) was enacted with effect from 10-06-2003.

1.4 The Commission notified the Tamil Nadu Electricity Regulatory Commission (Terms

and Conditions for Determination of Tariff) Regulations 2005 (herein after called

Tariff Regulations) on 03-08-2005under Section 61 read with Section 181 of the Act.

1.5 The Commission issued separate order (Order No. 2 of 2006) on Transmission

charges, Wheeling charges, Cross Subsidy surcharge and Additional surcharge on15-

05-2006, based on the petition filed by TNEB on 26-09-2005 under Section 42 of the

Act.

1.6 The Commission had issued its first Renewable Energy Tariff Order on 15-05-2006.

Later in 2009, Commission has issued technology wise second Renewable Energy

Tariff Orders. Further on 31-07- 2012, the Commission issued its third Tariff Order

with respect to renewable energy sources.

1.7 The Commission notified the TNERC (Terms and Conditions for Determination of

Tariff for Intra state Transmission / Distribution of Electricity under MYT

Framework) Regulations, 2009 (herein after called MYT Regulations) on 11-02-2009.

1.8 Subsequently, TNEB filed an application for determination of tariff with Aggregate

Revenue Requirement (ARR) for all functions on 18-01-2010, which was admitted by

the Commission after initial scrutiny on 09-02-2010. The Commission issued its

second Retail Tariff Order on 31.07.2010 (Order No. 3 of 2010).

1.9 TNEB was formed as a statutory body by the Government of Tamil Nadu (GoTN) on

01-07-1957 under the Electricity (Supply) Act 1948.The Board was primarily

responsible for generation, transmission, distribution and supply of electricity in the

State of Tamil Nadu.



June 2013

1.10 Government of Tamil Nadu, in G.O (Ms) No 114 Energy Dept, dated 08-10-2008

accorded in principle approval for the re-organisation of TNEB by establishment of a

holding company, namely TNEB Ltd and two subsidiary companies, namely Tamil

Nadu Transmission Corporation Ltd (TANTRANSCO) and Tamil Nadu Generation

and Distribution Corporation Ltd (TANGEDCO) with the stipulation that the

aforementioned companies shall be fully owned by the Government.

1.11 Tamil Nadu Generation and Distribution Corporation Ltd. was incorporated on 01-12-

2009 and started functioning as such with effect from. 01-11-2010.

1.12 Subsequently TANGEDCO filed tariff petition for determination of tariff for

Generation and Distribution for the year FY 2012-13, the Commission scrutinised and

reviewed the same. After a thorough review the third Order of the Commission on

determination of Generation and Retail Tariff was passed on 30-03-2012 (Order No. 1

of 2012).

Tariff Filing

1.13 The Tamil Nadu Generation and Distribution Corporation Ltd. (TANGEDCO) has

filed its application before the Commission on 19-02-2013 for final true-up and

approval of Aggregate Revenue Requirement (ARR) for the year 2010-11based on 5

months audited accounts, provisional true-up and approval of ARR for the year 2011-

12 based on provisional accounts, Annual Performance Review (APR) for the year

2012-13 based on estimates and its Multi Year Tariff petition for 2013-14 to 2015-16

along with tariff revision for 2013-14. There was a delay of 81 days in filing this

Petition and the Petitioner filed an Interim Application for condoning the delay of 81

days.

1.14 The Commission has written three letters to TANGEDCO directing them to file the

Tariff Petition for FY 2013-14. Copies of letters dated 8th January 2013, 21

st January

2013 and 8th February 2013 are placed as Annexure I. After hearing the submissions

of TANGEDCO, the Petition was admitted on 21-02-2103 after condoning the delay

and registered as T.P. No 1 of 2013. Copy of the admission order is placed as

Annexure II

Procedure Adopted

1.15 Regulation 7 (2) of Tariff Regulation specifies the following:“The applicant shall

publish, for the information of public, the contents of the application in an abridged

form in English and Tamil newspapers having wide circulation and as per the

direction of the Commission in this regard. The copies of Petition and documents filed

with the Commission shall also be made available at a nominal price, besides hosting

them in the website.”

1.16 The public notice containing the salient details with regard to the petition was

approved and communicated to TANGEDCO on 28-02-2013, with a direction to

arrange publication of the notice in news papers and it was published on 02-03-2013.

The written objections/suggestions/views from stakeholders were invited by 02-04-

2013.



June 2013

1.17 The TANGEDCO published the public notice in the following newspapers on March

02, 2013.

a) The New Indian Express (English Daily); b) The Deccan Chronicle (English Daily); c) Dinamani (Tamil Daily) and

d) Makkal Kural (Tamil Daily)

1.18 The Petition was placed before the State Advisory Committee on 26-04-2013. The list

of Members who participated in the meeting is detailed as Annexure III to this Order.

1.19 The list of stakeholders who have submitted written objections/suggestions/views

regarding the petition in response to the public notice are detailed in Annexure IV and

Objections/suggestions/views are included in Chapter A2.

1.20 The Commission conducted public hearing at the following places on the dates noted

against each:

Date Day Place Venue

03-05-2013 Friday Chennai Tamil Isai Sangam, Raja Annamalai Mandram, (Near

High Court),5, Esplanade Road, Chennai- 108

08-05-2013 Wednesday Tiruchirappalli Kalaiarangam Thirumana Mahal,

(Near central bus stand), Tiruchirappalli

10-05-2013 Friday Madurai

Platinum Jubilee Hatsun Aauditorium, Tamil Nadu

Chamber of Commerce and Industry, 178-B

Kamarajar Salai, Madurai

17-05-2013 Friday Coimbatore Corporation Kalaiarangam, R.S. Puram, Coimbatore

1.21 The lists of participants in each public hearing, is attached as Annexure V to this

Order. The views / comments / objections raised by the participants are discussed in

Chapter A2.

The Electricity Act, 2003, Tariff Policy (TP) and Regulations

1.22 Section-62 of the Act stipulates the guiding principles for determination of Tariff by

the Commission and mandates that the Tariff should ‘progressively reflect cost of

supply of electricity’, ‘reduce cross-subsidy’, ‘safeguard consumer interest’ and

‘recover the cost of electricity in a reasonable manner’.

Section-62 (1) of Act states as under:

“Section-62 (1):

1. The Appropriate Commission shall determine the tariff in accordance with provisions of this Act for



June 2013

a. supply of electricity by a generating company to a distribution licensee: Provided that the Appropriate Commission may, in case of shortage of supply of electricity,

fix the minimum and maximum ceiling of tariff for sale or purchase of electricity

in pursuance of an agreement, entered into between a generating company and a

licensee or between licensees, for a period not exceeding one year to ensure

reasonable prices of electricity;

b. transmission of electricity ;

c. wheeling of electricity;

d. retail sale of electricity.

Provided that in case of distribution of electricity in the same area by two or more

distribution licensees, the Appropriate Commission may, for promoting competition

among distribution licensees, fix only maximum ceiling of tariff for retail sale of

electricity.”

Similarly, the objectives stipulated in the Tariff Policy are as under:

“4.0 Objectives of the policy

The objectives of this tariff policy are to:

a. Ensure availability of electricity to consumers at reasonable and competitive rates;

b. Ensure financial viability of the sector and attract investments;

c. Promote transparency, consistency and predictability in regulatory approaches

across jurisdictions and minimise perceptions of regulatory risks;

d. Promote competition, efficiency in operations and improvement in quality of supply.”

1.23 In the State of Tamil Nadu, Tamil Nadu Electricity Regulatory Commission in

exercise of powers vested in it under the Electricity Act, 2003 (Act) passes the Tariff

Orders.

Transfer scheme

1.24 The proposal for Assets Transfer and Employee transfer called as Tamil Nadu

Electricity Board (Reorganization and Reforms) Transfer Scheme 2010 was notified

by the Government of Tamil Nadu vide G.O. (Ms).No.100 Energy (B2) Department

dated 19th Oct 2010 with the effective date of implementation as 1st Nov 2010. Based

on the above notification TNEB has been re-organized from 1st Nov 2010.



June 2013

1.25 This Transfer Scheme is provisional and addresses various issues like transfer of

assets, revaluation of assets and partly addresses the issue of accumulated losses. This

Transfer Scheme envisages deployment of staff of the erstwhile TNEB to

TANGEDCO and TANTRANSCO. The Commission in its earlier Tariff Order No. 3

of 2010 dated 31-07-2010 had suggested in line with the National Electricity Policy

(para 5.4.3) and Tariff Policy that the accumulated losses should not be passed on to

the successor entities and financial restructuring has to be resorted to clean up the

Balance Sheet of the successor companies and allow them to start on a clean slate so

that the successor entities could start performing better. The statutory advices that

have been sent to the Government of Tamil Nadu in this regard are appended as

Annexure VI. The Commission has also issued a statutory advice with regard to the

establishment of a separate Generating Company and establishment of four

Distribution Companies so that the performance of these companies can be improved

and efficiently monitored, which will enable proper investments and growth of the

individual company. This document is appended as Annexure VII.

1.26 Subsequently, as per the request of TNEB Limited, the second provisional transfer

scheme was notified by the State Government vide G.O. (Ms.) No.2, Energy (B2)

department, dated 2nd January 2012 with amendment in the restructuring of Balance

Sheet of TNEB for the successor entities i.e. TANGEDCO and TANTRANSCO,

considering the audited balance sheet of TNEB for FY 2009-10 and it had extended

the provisional time for final transfer of assets and liabilities to the successor entities

of erstwhile TNEB up to 31st October 2012. The same has been appended as

Annexure VIII.

1.27 This Transfer Scheme is also provisional and is subject to revision. The transactions

for 7 months i.e. from 1st April 2010 to 30th October, 2010 do not get reflected in the

opening balance sheet of the TANGEDCO as specified in the Transfer Scheme.

Impact of Provisional Balance Sheet:

a) According to Rule 9 (1) of Transfer Scheme, 2010 issued on 19th October 2010, the

transfer of assets and liabilities under the scheme is provisional and will be made final

upon the expiry of 12 months from the effective date of transfer.

b) The date was extended through notification dated 3rd January 2012 for additional 1

year i.e. upto 31st October 2012 for final transfer of assets and liabilities to successor

entities of erstwhile TNEB.

c) As on the date of filing of this petition, TANGEDCO and TANTRANSCO has sought

permission for extension of 6 months i.e. up to 30.04.2013 for final transfer of assets

and liabilities to successor entities of erstwhile TNEB and the same has been

approved by GoTN through G.O.Ms(23) dated 8th March 2013 (Annexure IX).

TANGEDCO and TANTRANSCO have now sought an extension for another six

months i.e. upto 31st October 2013 for final transfer of assets and liabilities to

successor entities of erstwhile TNEB and the same has been addressed to the GoTN

for approval and notification.



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d) In the absence of availability of opening balances based on the final Notification of

GoTN, as per transfer scheme, TANGEDCO has considered the opening balance as

per the provisional transfer scheme notified on 2nd January 2012.

1.28 Hence, Commission is of the view that once the final transfer scheme is notified by

the State Government, the impact due to revision in the opening balance of Fixed

Assets, Loan and Equity may have to be revisited and accounted during the tariff

determination process of the concerned year.

Unbundling of TNEB - 1st November 2010

1.29 TNEB was unbundled on 1.11.2010. Consequently it started functioning as two

separate entities namely TANGEDCO and TANTRANSCO. While TANGEDCO

was made responsible for generation and distribution, TANTRANSCO was made

responsible for transmission activities within the State.

1.30 The Commission in its Tariff Order issued on 31st July 2010 as well as 30th March

2012 had indicated that the accumulated losses upto the date of unbundling will have

to be dealt with in accordance with the National Electricity Policy and Tariff Policy.

The Commission had also clearly indicated that any losses incurred after 1.11.2010

only are being dealt with in various Tariff Orders subsequent to unbundling. In this

connection, the Commission would like to extract the following three paragraphs from

the Tariff Petition filed by TANGEDCO for the financial year 2013-14.

“10.19.6 As per the Tariff Order, the Hon’ble Commission had expressed a view that

the accumulated losses up to the date of unbundling will have to be dealt with in

accordance with Para 5.4.3 of the National Electricity Policy and Tariff Policy. The

provisions of the National Electricity Policy and Tariff Policy envisages that the gap

at the time of unbundling will have to be sorted out by financial restructuring and

support from the Government rather than passing on the accumulated losses to the

successor entities.

10.19.7 In line with the National Tariff Policy, National Electricity policy and as per

the Tariff Order dated 30th March 2012, TANGEDCO have not claimed any relief on

account of accumulated losses prior to unbundling on 1-11-2010 in the given petition.

The similar stand was taken in the earlier petition also.

10.19.8 The proposal of TANGEDCO is to create regulatory assets for the

unrecovered deficit post unbundling only. TANGEDCO would like to submit that even

though it has requested for creation of regulatory asset of the amount which is

unrecovered deficit after claiming part as a tariff hike, all efforts has been undertaken

to reduce such deficit and are under process to carry out Financial Restructuring

Plan under the guidance of State Government.”

1.31 The revenue gaps arising subsequent to unbundling were dealt with as Regulatory

Asset in the Order of the Commission dated 30th March 2012 and is being discussed

again in this Order.



June 2013

Brief Note on Tariff Filing and Public Hearing

1.32 In this Order Commission has dealt with important matters such as tariff schedule,

new capacity additions by TANGEDCO, Regulatory Asset Amortisation etc.

1.33 The Commission appreciates the concerns expressed by various stake holders both in

the written comments submitted by them to the Commission as well as the concerns

expressed during the Public Hearings held at Chennai on 3rd May 2013, Tiruchirapalli

on 8th May 2013, at Madurai on 10

th May 2013 and at Coimbatore on 17

th May 2013.

1.34 The Commission directs TANGEDCO to properly monitor the on-going projects so

that they get commissioned without further delay. The projects which were scheduled

to get commissioned last year have not been commissioned so far and have to be

commissioned at the earliest. TANGEDCO should also ensure that the

TANTRANSCO completes all the associated transmission system for evacuation of

power from the generating stations which are getting commissioned during the year

2013-14 so that power generated from the generating stations are transmitted up to the

load centres without any bottle necks. The TANGEDCO should ensure that the power

available at the sub-stations is taken up to the consumption points by way of

appropriate distribution system. All these capacity addition as well as system

strengthening plans will have to be carried out through a well structured business plan

and individual schemes catering to the need of the business plan. All such plans and

schemes shall be submitted in accordance with the Terms and Conditions of Tariff

Regulations 2005, MYT Regulations as well as Licensing Conditions to the

Commission.

1.35 The submission for approval in this regard so far has been unsatisfactory. The

Commission has been addressing the utilities by way of letters as well as by way of

directions. The compliance to such letters and directions will have to be taken

seriously and must be met without fail.

1.36 Further, list of correspondence with TANGEDCO in regard to data gaps and replies

furnished are given in Annexure X.

1.37 Various suggestions and objections that were raised on TANGEDCO’s Petition after

issuance of the Public Notice both in writing as well as during the Public Hearing,

along with TANGEDCO’s reply and the Commission's views have been detailed in

Chapter A2 of this Order.



June 2013

1.38 Unmetered supply in the State relates mainly to agriculture and hut consumption.

TANGEDCO has been assuming the AT&C loss level by arriving at the consumption

of agriculture and huts. This issue was also a subject matter of Appeal before the

Hon’ble Appellate Tribunal of Electricity. In its last two orders, the Commission has

estimated agricultural consumption based on the CEA formula. The Commission had

also directed TANGEDCO to furnish sample data of the metered connections for

agricultural supply for FY2012-13. The data so provided was analysed, and it was

observed that the average consumption per HP had increased by 9.2% over that of FY

2011-12. Based on this data the average hours of supply per day amounted to 3.67

hrs/day which is marginally higher than that for FY 2011-12. The Commission

recognizing the fact that FY2012-13 was a year of severe shortage of power along

with being a drought year, took the view that it is improbable that the agricultural

supply hours could have been higher than that of the previous year. Hence the

Commission has assumed the average consumption per HP at the same rate as in

FY2011-12. Based on the same data the energy requirement for agriculture has been

estimated for the second control period. Similarly, estimates have been made for

consumption by huts duly reflecting the number of huts with and without televisions

and also factoring in the consumption on account of distribution of free CFL lamps,

mixers, grinders and fans.

1.39 TANGEDCO in its petition this year has proposed tariff hike for two categories of

consumers namely Hut and Agriculture Category, tariff rates and conditions for all

other categories is proposed to be as per prevailing tariff order dated 30th March

2012.

• Fixed Charges for Tariff Category LT-1B for Hut Consumers to be increased

from Rs. 60/Month/Service to Rs. 125/Month/ Service.

• Fixed Charges for Tariff Category LT-IV for Agriculture Consumers to be

increased from Rs. 1750/HP/Annum to Rs. 2500/HP/Annum.

1.40 The cost of entire consumption on account of huts as well as on account of

agricultural consumption is being borne by the Government of Tamil Nadu by way of

subsidy under Section 65 of the Electricity Act 2003. In this matter, GoTN has given

commitment letter No. 2369/A1/2013 dated 10th June 2013 detailing provision of

tariff subsidy to LT IB and LT IV categories of electricity consumers. GoTN has also

stated that the budget provision for necessary additional expenditure has already been

made in the budget for the year FY 2013-14 and a formal order of GoTN in this

regard will be issued shortly. The commitment letter received from GoTN is placed at

Annexure XI. The GoTN has further clarified vide letter No. 2369/A1/2013 dated

10th June 2013 that the subsidy for other category of consumers as provided in FY

2012-13 would continue for FY 2013-14 and necessary G.O will be issued separately.

This letter has been appended as Annexure XII.



June 2013

Applicability of Order

1.41 This Order will come into effect from 21-06-2013. The Generation and Retail Tariff

contained in this order will be valid till 31-03-2014. TANGEDCO shall file necessary

petition in accordance with the Regulations in a timely manner to enable the

Commission to pass the next Tariff Order in time.

Layout of the Order

1.42 This Order is organised into seven Chapters:

• Chapter A1 provides details of the tariff setting process and the approach of

the Order;

• Chapter A2 provides a brief of the Public Hearing process, including the

details of comments of various stakeholders, the Petitioner’s response and

views of the Commission thereon;

• Chapter A3 provide details/ analysis of the final true up for FY 2010-11,

provisional true-up for FY 2011-12 and annual performance review for FY

2012-13;

• Chapter A4 provides analysis of the petition for determination of the

Aggregate Revenue Requirement for FY 2013-14 to FY 2015-16;

• Chapter A5 provides details of determination of Open access charges and

Retail Supply Tariff for all consumer categories, and the approach adopted by

the Commission in determining the tariff;

• Chapter A6 gives the tariff schedule applicable for the consumers; and

• Chapter A7 provides details of the Directives of the Commission for

compliance by TANGEDCO.

1.43 The Order contains the following Annexure, which are an integral part of the Tariff

Order.

• Annexure I – Copies of letters written to TANGEDCO directing them to file

the Tariff Petition for FY 2013-14

• Annexure II – Copy of the admission order

• Annexure III – The list of participants at the State Advisory Committee

meeting.

• Annexure IV – The list of stakeholders who have submitted

objections/suggestions/views regarding the petition in response to the public

notice.



June 2013

• Annexure V – The lists of participants at each public hearing.

• Annexure VI – Copy of the statutory advices given by the Commission sent to

the Government of Tamil Nadu.

• Annexure VII – Copy of statutory advice of the Commission regarding the

unbundling of TANGEDCO into a separate Generating Company and four

Distribution Companies.

• Annexure VIII – Copy of second provisional transfer scheme as notified by

the State Government vide G.O. (Ms.) No.2, Energy (B2) department, dated

2nd January 2012.

• Annexure IX – Copy of extension for finalization of transfer scheme upto 30th

April 2013 notified by the State Government vide G.O.Ms(23) dated 8th March

2013

• Annexure X – List of letters of TANGEDCO with regard to data gaps and

replies.

• Annexure XI – Copy of Commitment letter received from GoTN for providing

the tariff subsidy to Agriculture and Hut consumers.

• Annexure XII – Copy of Letter received from GoTN extending the subsidy for

other category consumers in FY 2013-14.

• Annexure XIII – Copy of Letter received from GoTN regarding amortization

of regulatory asset.

Approach of the order

1.44 Commission in its last order had stated that the Capital Account and the Revenue

Account has not been maintained separately in the course of operation of TNEB and

an attempt is being made in this order to segregate the same to bring financial

discipline in the successor entities.

The Commission has adopted the Multi Year Tariff (MYT) approach for tariff

determination since its tariff order in FY 2010-11. The first control period of 3 years

was upto FY 2012-13, during which time the Commission has issued two tariff orders

during FY 2010-11 and FY 2012-13. The second control period spanning 3 years

starts this year i.e. in FY 2013-14 and is upto FY 2015-16.

1.45 The extract from the relevant portion of the TNERC (Terms and Conditions for

Determination of Tariff for Intra state Transmission / Distribution of Electricity under

MYT Framework) Regulations, 2009 regarding control period is extracted below.

“3). Multi year Tariff framework



June 2013

i) Control Period

The control period under the MYT framework shall be for a duration of 3 years. The

year preceding the first year of the control period shall be the base year.”

1.46 The broad approach adopted in this order is given below:

• The Commission has taken into consideration the second provisional transfer

scheme as notified by the State Government vide G.O. (Ms.) No.2, Energy

(B2) department, dated 2nd January 2012 with amendment in the restructuring

of Balance Sheet of TNEB for the successor entities i.e. TANGEDCO and

TANTRANSCO.

• The Commission has referred to the audited accounts of TANGEDCO for FY

2010-11 (5 months) for truing up the expenses of the utility. The Commission

has undertaken a review of the various performance parameters as well as the

controllable cost factors. Based on the assessment the Commission have

arrived at the allowable ARR and revenue recovered by the utility. Also,

Commission for the comparison purposes arrived at the approved figures for

FY 2010-11 (5 months) in its last order on a pro-rata basis.

• The same exercise has been undertaken for the provisional true-up for FY

2011-12 based on the provisional accounts and the ARR and revenue

recovered for the year have been arrived at.

• For the FY 2012-13, Commission sought actual figures for the year from

TANGEDCO. Based on the information so obtained and based on provisions

of the Tariff regulation as well as trend in the approved costs in the previous

two years, the ARR and revenue recovered have been arrived at.

• For the Second control period between FY 2013-14 to FY 2015-16 the

Commission has extended the rationale adopted for allowing/ disallowing

various controllable components of the ARR for the first control period, to

project the ARR for the second control period and determine tariff for FY

2013-14.



June 2013

A2: STAKEHOLDERS’ COMMENTS, TANGEDCO’S REPLY AND

COMMISSION’S VIEW

2.1 The following section summarizes the views/ objections/ suggestions given by

stakeholders in writing as well as at the public hearings. TANGEDCO’s reply to these

views/ objections/ suggestions and the Commission’s view on the same.

1. General Issues

Stakeholder Comments

2.2 Commission is requested to appoint a consultant to study the entire operations and

finances of TANGEDCO to identify improvements that are needed to comply with the

Act & various policies and rules made there under.

2.3 Commission must direct Transfer of Assets & Liabilities to be completed by end of

June 2013 and Audited Accounts as on 31.3.2013 prepared and published by

31.08.2013

2.4 The impact of FRP on the tariff is to be spelt out and the said agreement must be

publicised.

2.5 Commission to engage a Cost Accountant to make inter firm comparisons. Request to

consider Pan India and Abroad firms for costs of TANGEDCO, fix benchmark cost

and performance standards.

2.6 Financial Accounting, Cost Accounting Code & systems of TANGEDCO should be

published so that it helps make meaningful comments on the petition.

2.7 Commission must reiterate that Generation and Distribution functions of

TANGEDCO should be separate. Unless this is done the costs of generation and

distribution cannot be accurately ascertained.

2.8 Commission to write to GoTN to drop Electricity tax as it distorts the tariff system.

2.9 Directives of Commission are not being adhered by TANGEDCO. TNERC is

requested to monitor the directives individually and intensively and make

TANGEDCO fall under the groove ‘measure, monitor and manage’ and understand

that such directives are only for the performance improvements. Commission to direct

TANGEDCO to give a time bound plan to implement directives of the Commission

over the years. The progress report should be publicized at the end of each calendar

quarter.

2.10 Power injected by OA consumers into the Grid to be deducted from their recorded

consumption when there is load shedding at the consumer end



June 2013

2.11 From the balance sheet of TANGEDCO it is noted that the current liabilities are more

than the current assets resulting in management of working capital requirement with

the current liabilities in which case inclusion of interest on working capital for the

total current assets is not correct and fair as no funds was actually deployed.

2.12 TNERC must also take strong action to curb tendency of non-performance both in the

technical and financial fronts, if necessary by levying a fine say Rs.500.00 millions

from TANGEDCO. There is precedence with MERC on this score, to bring about a

disciplined approach. TANGEDCO is trying to play the same game as it has done a

couple of years back – not asking for a tariff revision and requesting creation of

“Regulatory Assets”. TNERC may well earmark this fine from the revenues of 2013-

14 for certain specific purpose of improving normative parameters, which have

exceeded beyond limits.

2.13 TANGEDCO should have consumer representation within its organisation.

2.14 Commission to make a provision for instituting comprehensive and integrated

Information Management system within TANGEDCO

2.15 Commission to have a consumer advocacy cell based on KERC model.

2.16 Benefits of financial restructuring plan have not been furnished in the petition.

2.17 Tamil version of the Tariff Petition shall be made available.

2.18 Uninterrupted power supply shall be given in the night period.

2.19 TANGEDCO shall aggressively implement the demand side management.

2.20 Energy conservation shall be encouraged by using modern equipments. Renovation

and modernization shall be undertaken in distribution lines.

2.21 Uninterrupted power supply shall be given to the farmers.

2.22 This public hearing should be conducted in two ways by the Commission.

• To assess the performance and the ways to identify how to provide quality service

by the TANGEDCO to public.

• To increase the tariff.

2.23 White paper statement should be released about the TANGEDCO’s accumulated loss.

2.24 White paper statement should be released about the future generation plan and how to

mitigate this loss in future.



June 2013

2.25 Privatization of distribution particularly distribution in the city is mandatory as per the

direction dated 05-10-2012 issued by the Ministry of Power. It seems that

restructuring plan for TANGEDCO’s accumulated loss has been announced and the

Government of Tamil Nadu has accepted the plan. This plan should be under

consideration.

2.26 Commission to pass an order to keep Deemed Demand concept in respect of third

party power.

2.27 Commission to insist on TANGEDCO to publicize the facts of agreement between

Government and TANGEDCO as far as restructuring the losses are concerned

2.28 Identify ways to compensate the loss of TANGEDCO, rather than transferring the

same to Government.

2.29 Vacancies of Wiremen and other subordinate employees of TANGEDCO should be

filled in all the TANGEDCO offices to provide good service to the public.

2.30 Smart meter system which is now used in foreign countries should be now

implemented in Tamil Nadu. The consumers who consume power during peak hour

should be charged more.

2.31 It is stated that power can be produced at a cost of Rs.2.14. However, high cost

power at the rate of Rs.17 to 18 is purchased from the private parties even after

restrictions by the Commission. The power purchase from high cost power stations

has been supplied to the MNC’s at a lower cost.

2.32 Uninterrupted power supply should be given to the agricultural services as given in

SEZ and in Chennai. All power generated at Neyveli, Kudankulam etc. to be given to

Agriculture in Tamil Nadu.

2.33 Uninterrupted power supply given to the MNCs shall be stopped.

2.34 Freebies were announced by the Government without considering the power shortage

and without proper planning. The Commission should have pointed out the issue.

2.35 LED Street lighting is important in system T & D loss reduction. Recognize clean

technologies like LED lighting and consider a preferential tariff

2.36 For energy conservation purpose LED lights may be fixed in all the streets of the

Villages, Towns, and cities instead of using tube lights.



June 2013

TANGEDCO’s Reply

Appointment of consultant

2.37 The accounts of TANGEDCO are being audited by a firm of qualified chartered

accountants as per the requirements of the companies Act 1956.In addition to the

above, being a government company the functioning of TANGEDCO is also subject

to commercial and expenditure audit by the Accountant General. Moreover, the

Hon’ble TNERC is vetting the tariff petition filed by TANGEDCO by appointing a

reputed consultancy firm. Hence, the necessity to appoint a consultant to go into the

entire operations and finances of TANGEDCO does not arise.

Final Transfer Scheme

2.38 The Board has approved the proposal to seek extension of time by another six month

upto 30th October 2013 for final transfer of assets and liabilities to the successor

entities of erstwhile TNEB and the proposal is under the consideration of Government

of Tamil Nadu. Steps are being taken to complete the audit of annual accounts for the

FY 2012-13 and to place the same before the AGM of TANGEDCO on or before

30.09.2013 which is the time limit prescribed under the provisions of the companies

Act 1956.

Compliance of Directives

2.39 The status of progress on directives issued by Hon’ble TNERC in tariff order dated

30th March 2012 has been furnished in the tariff petition filed before the Hon’ble

TNERC on 19th February 2013. The details of these directives are available on the

TNERC website.

Financial Restructuring Plan

2.40 At the time of submission of tariff petition to the Hon’ble TNERC, the FRP process

was in its initial stage and hence the impact of the same could not be taken into

consideration in the tariff petition. The given details of the FRP are still being worked

out and if the same is finalised before the issuance of Tariff Order it will be submitted

to the Hon’ble TNERC for its consideration.

Cost Accounting system of TANGEDCO

2.41 Each generation and distribution utilities in India have their own power source owing

to their geographical location. Hence, comparing the cost of TANGEDCO with other

utilities may not by itself give the desired results. However, steps are being taken to

conduct the cost audit by a qualified cost Accountant as per the requirements of the

Companies Act,1956.

Comparison with Other Utilities

2.42 The contention of the stake holder that the cost needs to be compared with other state

requires consideration of the following issues:



June 2013

(a) The difference in power generation mix and consumer mix

(b) Power purchase expenses considering the diversity in the sources.

(c) Geographical diversity in the state considering the key point that TANGEDCO is supplying electricity to wide spread area of Tamil Nadu as compared to

other states of India.

(d) Differential policies adopted by the State Government in relation to industrial,

economic and agricultural sector.

(e) Considering the above parameters the comparison should be made on common

parameters.

Bifurcation of Generation and Distribution Function

2.43 These are the suggestion from the stake holders to the Hon’ble Commission.

Electricity Tax

2.44 TANGEDCO submits that the issue relating to dropping of electricity tax does not

come within the purview of tariff revision exercise. It is a policy decision to be taken

by the Government of Tamil Nadu.

OA consumption to be deducted from recorded consumption

2.45 TANGEDCO submits that there is no such provision under the Act as well as in the

Regulations notified by the Commission.

Levy of Demand Charges

2.46 The demand charges are intended to cover the fixed cost of TANGEDCO including

interest, depreciation employee cost, repair and maintenance cost etc., and hence even

if there is no power supply the demand charges would be levied. The recovery of

fixed charges does not have any relevance to the hours of supply or the quantum of

energy supplied.

2.47 The Hon’ble APTEL in appeal No:257 of 2012 preferred by The Southern India Mills

Association (SIMA), Coimbatore against the Tariff Order No:1 of 2012

dated:30.03.2012 issued by the Hon’ble TNERC has upheld the order of TNERC

with regard to levy of demand charges.



June 2013

Negative balance in Shareholder’s funds

2.48 As per the Tariff Order, the Hon’ble Commission had expressed a view that the

accumulated losses up to the date of unbundling will have to be dealt with in

accordance with Para 5.4.3 of the National Electricity Policy and Tariff Policy. The

provisions of the National Electricity Policy and Tariff Policy envisages that the gap

at the time of unbundling will have to be sorted out by financial restructuring and

support from the Government rather than passing on the accumulated losses to the

successor entities.

2.49 In line with the Tariff Policy, National Electricity policy and as per the Tariff Order

dated 30th March 2012, TANGEDCO have not claimed any relief on account of

accumulated losses prior to unbundling on 1-11-2010 in the given petition.

Supply of power to MNC’s

2.50 There is no concession in tariff for the MNCs. Only uninterrupted power supply with

the tariff on par with other consumers is given.

Energy Efficiency Measures

2.51 TANGEDCO is taking steps to replace incandescent bulbs with CFLs in Villupuram

and Kanyakumari districts. The same will be duplicated in other districts. Out of the

cost of Rs 60/- per CFL, TANGEDCO will pay Rs 45/- and consumer will pay Rs

15/-.

Commission’s View

2.52 The Commission appreciates the concerns expressed by various stake holders both in

the written comments submitted by them to the Commission as well as the concerns

expressed during the Public Hearings held at Chennai on 3rd May 2013, Tiruchirapalli

on 8th May 2013, Madurai on 10

th May 2013 and Coimbatore on 17

th May 2013.

Transfer of Assets & Liabilities

2.53 The Transfer of Assets & Liabilities was to be completed by 30th April 2013. But

TNEB has sought for another 6 months extension from the Govt. The Commission is

of the opinion that this has to be completed at the earliest. The Commission directed

the utility to complete it as soon as possible through GoTN.

Financial Restructuring Plan

2.54 Commission would like to clarify that this issue can be examined only when the final

FRP scheme is submitted to the Commission.



June 2013

Segregation of Generation and Distribution business

2.55 Opinion of Commission on segregation of generation and distribution function was

conveyed as statutory advice on 27th October 2010 which is annexed in this tariff

order.

Tamil Version of Petition must also be available

2.56 Commission has already given a direction on this matter to TANGEDCO for making

the Tamil version of the Petition available.

Impact of freebies doled out by Government

2.57 Commission would like to reiterate that it functions within the powers derived from

the Electricity-Act 2003 and cannot interfere in the policies of GoTN

Energy Efficiency and Demand Side Management

2.58 Demand Side Management is an effective tool to meet the demand – supply position

in the short term. Being a cheaper option, it helps in meeting the demand as compared

to capacity addition. Also, it enables to reduce the carbon emission and defers the

investment to subsequent years.

2.59 It is necessary to create awareness among users for promoting Energy Conservation

and Demand Side Management.

2.60 TANGEDCO should motivate the domestic and agriculture sector to adopt DSM

measures. Awareness has to be created for using Star Labelled Appliances which may

cost more but would pay back by way of energy saving.

2.61 To facilitate DSM measures in the state, the Commission has notified the DSM

regulation on 26th February 2013. TANGEDCO is to submit relevant schemes for

implementing DSM and Energy Efficiency schemes to the Commission as specified

in the Regulation.

2.62 Use of CFLs should be encouraged with adequate arrangement for disposal of

unserviceable CFLs.

Restriction & Control

2.63 Various issues raised by stakeholders relating to Supply Code Regulations and R&C

Orders do not fall under the purview of present exercise of Tariff determination.



June 2013

Working Capital

2.64 Current liabilities are due to non payment of dues by TANGEDCO. However

Commission cannot assume that TANGEDCO will default and accordingly not allow

for any working capital. For the purpose of this order Commission is allowing

working capital based on norms laid out after considering available consumer security

deposits.

Tax Exemption

2.65 On suggestions regarding waiving off electricity tax during the period of R&C

measures, the Commission would like to specify that Electricity Generation Tax or

Electricity Consumption Tax is in the domain of Government of Tamil Nadu.

Quality of Supply

2.66 As regards uninterrupted power supply, the Commission directs TANGEDCO to

maintain quality of supply as specified in Tamil Nadu Electricity Distribution

Standards of Performance Regulations, 2004 as amended in which it specifies that

“3. Quality of Service

Quality of service means providing uninterrupted, reliable electric supply at

stipulated voltage and frequency, which will be the end result of its planning,

designing of network, operation and service management to ensure stability in supply

and prompt compliance of consumers’ complaints on metering and billing. The supply

with frequent power failure, fuse of calls, voltage fluctuations will not ensure

continuity in supply. These factors determine the degree of satisfaction of the

consumers.”

2.67 Also, the Commission feels that if the capacity addition would be on time, as

discussed in later chapters, the power supply situation should improve in the second

control period leading to improved supply hours.

2.68 TANGEDCO is also required to take all necessary steps to ensure quality of service as

per regulations.

2. Delay in filing


2.69 The inordinate delay on the part of TANGEDCO had been condoned by the

Commission. We regret that this should not have been done and instead the

Commission could have suo motu revised the tariff. There is precedence of this type

in one of the orders of West Bengal Electricity Regulatory Commission.

2.70 The tariff petition which had to be filed in November 2012, has been filed only in

February 2013. The reason for the delay shall be informed to the public.



June 2013

TANGEDCO’s Reply

2.71 The delay in filing of the tariff petition has been caused mainly because of the

following reasons.

• The Financial Restructuring Plan (FRP) which was notified by the

Government of India on 5th October, 2012 was in the process of being

finalized with multitude of meetings with various bankers during the months

of October, November and December of 2012.

• Thereafter the audit of accounts for the year FY 2011-12 was under process

and was completed by 31st January 2013.

Commission’s View

2.72 Commission had been monitoring the filing of the petition vis-à-vis the due date of

filing it i.e. 30th November 2012. The commission had through two letters to

TANGEDCO, called for immediate filing of the ARR and tariff petition. The petition

was eventually filed on 19th February 2013. After hearing the submissions made by

TANGEDCO, the Commission condoned the delay in filing this petition. The

Commission has directed TANGEDCO to file its petition for ARR and tariff for the

next year by the appointed date.

3. O&M Expenses


2.73 Inter-firm comparison of costs especially O & M costs for TANGEDCO should be

done.

2.74 In the O & M expenses, the employee cost is projected to increase by 50% (Table 83).

The norm for the industry needs to be checked.

2.75 The Government of Tamil Nadu has accepted the loss of TANGEDCO of about

Rs.25,512 Crores as on 31.11.2010. But the Government has not agreed to take the

pension liability of the employees and termed it as employee expenses. If it is

considered as employee expenses the same can be passed on to the tariff which may

affect the public. Therefore, the Government shall take the pension contribution as a

liability. The Commission shall direct the TANGEDCO to implement the directions

given in 2010.

TANGEDCO’s Reply

2.76 The employee expenses submitted in the tariff petition for FY 2012-13 is based on the

actual expenses incurred. The Hon’ble Commission in its last tariff order had

approved the employee cost for TANGEDCO based on the apportioning of expenses

between TANGEDCO and TANTRANSCO. The industry norms cannot be compared

due to the geographical diversity in the state and for the reasons that electricity is

being supplied to widespread areas within the state of Tamil Nadu.



June 2013

Commission’s View

2.77 Commission is guided by following regulations

2.78 Regulation-25 of TNERC Tariff Regulations:

“25. Operation and Maintenance Expenses

The operation and maintenance expenses shall be derived on the basis of actual

operation and maintenance expenses for the past five years previous to current year

based on the audited Annual Accounts excluding abnormal operation and

maintenance expenses, if any, after prudence check by the Commission. The

Commission may, if considered necessary engage Consultant / Auditors in the process

of prudence check for correctness.

The average of such normative operation and maintenance expenses after prudence

check shall be escalated at the rate of 4% per annum to arrive at operation and

maintenance expenses for current year i.e. base year and ensuing year.

The base operation and maintenance expenses so determined shall be escalated

further at the rate of 4% per annum to arrive at permissible operation and

maintenance expenses for the relevant years of tariff period.

…”

2.79 However as submitted by TANGEDCO, Commission is of the view that it is not

appropriate to project the expenses for the next control period based on the actual

expenses incurred prior to unbundling of power utilities. Hence in this order

Commission projects the O&M expenses for next control period based on the audited

accounts for FY 2010-11 and provisional accounts for FY 2011-12.

2.80 Commission acknowledges the usefulness of benchmarking of O&M expenses and

comparison with other utilities, however considering the fact that the utilities in the

state are still in transition such comparison will not be of much help in the early stages

of restructuring.

4. Fuel Cost and FPAC


2.81 Increased use of oil by TANGEDCO is increasing the fuel cost and TNERC needs to

specifically pay attention. TANGEDCO should be asked to justify the fuel

consumption rates and costs by comparing with those of other similarly placed

utilities in India.

2.82 TANGEDCO should have submitted the Petition for Fuel Price Adjustment Charges

(FPCA). It is said that it has been granted an extension of time of four months. It has

not been complied with. The Commission has asked for its readiness to submit the

same.



June 2013

2.83 TANGEDCO to justify the fuel consumption rates vis-a-vis other utilities in India and

compare costs of its coal thermal plants vis-a-vis Central Generating stations.

TANGEDCO’s Reply

2.84 The claim for FPCA will be filed once the power situation in the state improves and

R&C measures are lifted.

Commission’s View

2.85 Adjusting FPAC charges in the middle of the year has been allowed by the Electricity

Act 2003 under section 62 sub section 4, which states:

“No tariff or part of any tariff may ordinarily be amended, more frequently than once

in any financial year, except in respect of any changes expressly permitted under the

terms of any fuel surcharge formula as may be specified.”

2.86 Also, the APTEL in its Order O.P. 1 of 2011 dated 11-11-2011 under para 65 (vi) has

stated that

“(vi) Fuel and Power Purchase cost is a major expense of the distribution Company

which is uncontrollable. Every State Commission must have in place a mechanism for

Fuel and Power Purchase cost in terms of Section 62 (4) of the Act. The Fuel and

Power Purchase cost adjustment should preferably be on monthly basis on the lines of

the Central Commission’s Regulations for the generating companies but in no case

exceeding a quarter. Any State Commission which does not already have such

formula/mechanism in place must within 6 months of the date of this order must put in

place such formula/ mechanism.”

2.87 Hence in line with the in principle approval of the implementation of the FPCA

mechanism in the State, the Commission has decided not to allow the 4% escalation

in fuel price as sought for by TANGEDCO in its petition for the current MYT period.

TANGEDCO shall file quarterly FPCA petitions to the Commission to recover the

actual cost of fuel incurred and the actual cost of power purchase, if the same are in

variance from the figures approved in this Tariff Order.

2.88 Therefore, the Commission clarifies that FPAC exercise is important and should be

implemented and it is irrespective of annual tariff increase.

2.89 TANGEDCO was allowed to withdraw FPCA Petition for filing a corrected Petition.

However, they did not do it and filed the Tariff Petition beyond the due-date. After

the issue of this order, TANGEDCO shall file FPCA Petition every quarter as no

escalation has been considered for future power purchase and fuel price adjustment.



June 2013

5. Generation and Power Purchase


2.90 TANGEDCO should explain how NLC’s 600 MW station of the same vintage as

Ennore is functioning well. In the context TANGEDCO should refer the coal handling

issues to NTPC. Cost from TANGEDCO plants is higher when compared to CGS i.e.

the cost of power purchase from TANGEDCO’s own power is Rs. 4.36 p.u where as

cost of power purchase from Central Generating stations is only Rs. 3.01 p.u. This

shows that TANGEDCO’s fuel management is inefficient.

2.91 TANGEDCO should be asked to give cost comparison of its coal based generating

stations with those of CGS to justify higher prices.

2.92 In estimating the Capital Costs, capitalization of the new plants shows great

divergence (Table 63). MTPS III has a cost of about Rs 6 Crores per MW while

NCTPS Stage II has a cost of Rs 4.85 Crores. The difference needs to be explained.

2.93 Power Generation in TANGEDCO’s own plants like Valathur and Mettur is getting

delayed. Action shall be taken to speed up the works.

2.94 Delay in starting generation in existing power generation stations like Mettur,

Valuthur, Kuthalam etc. should be explained.

2.95 TANGEDCO to present the actual conditions of Mettur 600 MW plant before the

public so as to know the status of money spent

2.96 There is no need for private power generation. Government should make

arrangements for own generation.

2.97 Power cut has been reduced due to 3000 MW generated by the Wind Mills. But wind

mills are not permitted to generate and due to that about 1000 MW is wasted. On the

other hand 40% power cut still exists. High frequency is stated to be the reason for not

permitting the wind mills to generate. Action should be taken to utilize the entire

power generated by the wind mills during May to September.

2.98 It has been announced that Sandynallah Hydro Electric Project will be completed in

10 years to meet the variations in the wind generation. The project shall be completed

within a short span of time.

2.99 The power generated by the wind mills is consumed by various consumers in different

districts. The wind energy has to be adjusted for peak hour, non peak hour and

normal hours. It is doubtful whether the accounting of wind energy is done properly

by the TANGEDCO. Since it is not possible to take readings in the large number of

wind mills, readings furnished by the consumers may be used for billing resulting in

huge loss to the TANGEDCO. The Commission shall form rules and regulations for

adjustment of generation from wind mills.



June 2013

2.100 Commission in the last tariff order directed TANGEDCO not to purchase power from

the four private parties GMR, PPN, Samalpatti and Madurai power corporation. But

TANGEDCO has purchased power from the four private parties. It may be clarified

whether the Commission is functioning as a spectator or regulator. Power was

purchased at a higher cost.

2.101 Automatic meter reading facility shall be provided in the wind mills to properly

account the wind generation.

2.102 The entire power i.e. 100% share from the Kudankulam, Kalpakkam and Neyveli has

to be allotted to Tamil Nadu. 2 Reactors are ready in Kudankulam and the total

capacity of 2000 MW of power can be generated. But only 950 MW was allotted for

Tamil Nadu.

2.103 New projects should be taken up to increase own generation and provide

uninterrupted power supply instead of purchasing costly power from private players.

2.104 In Tamil Nadu quality of coal is very bad. Purchasing this kind of bad quality coal is

the only the reason for less generation. This should be avoided.

TANGEDCO’s Reply

2.105 Till 2006, 2007 there was no shortage of power as there was no gap between the demand and supply. After 2006, 2007 the demand increased due to economic

development and boom in the IT sector. Power plants cannot be installed within a

few months. For installing a 1 MW plant, it costs Rs 5 to 5.5 Crores/MW and takes

minimum of 4 years after work is started. Therefore, plans were drawn to install

power plants. The NTPC Vallur plant and North Chennai plant will come up by next

month. The NLC JV plant of 1000 MW is underway and will come in by end of the

year. By then, the demand will be equal to supply.

2.106 In the year 2012-2013, own thermal power stations performed well. Due to failure of

monsoon, performance of hydro power stations were affected badly. Kuttalam gas

station has been put into service after attending the major repair work.

2.107 The coal prices in domestic and international market have witnessed hike during the

past and accordingly projection have been made in the tariff petition. The details of

fuel prices and cost have been submitted in the tariff petition.

2.108 About 4000 MW will be available as additional generation, power cut problem may

be resolved gradually and will be lifted by December 2013.

2.109 MTPS and NCTPS are allotted on the basis of EPC contract. The tenders were

selected on the basis of international competitive bidding. The foreign components

involved in MTPS (Rs.1914 Crores) is much more than the foreign component in

NCTPS projects (370.95 Crores) and hence, the cost per MW is higher.



June 2013

2.110 Power purchase from the IPPs is resorted to only to meet the demand especially

during summer and examination time. Even this got approved from TNERC

subsequently.

Commission’s View

2.111 The Central Generating Stations viz. Kudankulam, Kalpakkam and NLC will not

come under the jurisdiction of the Tamil Nadu Regulatory Commission or under the

State Government. Hence, the views submitted in relation to these stations are not

within the purview of this State Commission.

2.112 The Commission directs the TANGEDCO to properly monitor the on- going projects

so that they are commissioned without further delay.

2.113 The TANGEDCO should also ensure that the TANTRANSCO completes all the

associated transmission system for evacuation of power from the generating stations

which are getting commissioned during the second control period, so that power

generated from the generating stations are transmitted up to the Load Centers without

any bottle necks. Necessary upgradation of the distribution system shall also be done

by TANGEDCO for effectively carrying power to the consumers

2.114 TANGEDCO has not provided necessary information for approving capital cost.

Commission is provisionally accepting the TANGEDCO submission.

2.115 As regards the generation cost of new capacity addition, the Commission directed

TANGEDCO to file separate petition for the approval of capital cost and tariff

determination of new power plants. However, the Commission in this Tariff Order for

the purpose of power purchase has provisionally considered the fixed and variable

charges for new power plants.

2.116 Commission’s Open Access Regulation 2005 specifies that open access customer

shall provide metering arrangement as per the applicable CEA regulation and meters

should have facility to communicate the readings to SLDC or as may be specified by

the Commission.

2.117 Cost comparison between ISGS and TANGEDCO generating stations has to be on

like to like basis. While most of the CGS are pit ahead stations, the generating stations

of TANGEDCO are load centre stations.



June 2013

6. AT&C Losses


2.118 TANGEDCO’s argument in 3.29.8 in petition related to lesser computed Agricultural

consumption and revision of T&D loss trajectory is flawed. Neither a representative

study was done for establishing norms for agricultural consumption per HP of

connected load, nor any metering has been done to assess and a thumb rule was

adopted so far for this purpose. No serious study has been done by TANGEDCO to

identify the 11 KV/22 KV feeders and take corrective action. In this context

Commission should allow T & D loss at 18% as claimed by TANGEDCO in the past.

2.119 The average purchase cost of power for TANGEDCO is Rs.3.77 per unit inclusive of wheeling cost of 21.98 paisa per unit. The average tariff realized per unit from HT I

A Category consumers (Industries) is Rs 6.95 and that of HT III Category of

consumers (Commercial) is Rs 7.98. A huge burden is put on them destroying their

competitiveness and economic efficiency.

2.120 Committee should be formed to reduce the loss of TANGEDCO and limit should be

fixed in respect to the loss.

2.121 Efforts should be taken to reduce the T&D loss every year.

2.122 Misuse of tariff with dishonest intention is booked under theft of energy. Misuse of

energy shall be booked under section 126 and bypassing the meters shall be booked

under theft of energy.

2.123 Electricity theft should be curtailed.

2.124 Agricultural related activities like nursery is booked under theft. The Electricity Board is booking the farmers under theft and even when represented to the District

Collector, the District Collector was also not in a position to help.

2.125 Loss incurred by TANGEDCO is due to theft of electricity and not due to free electricity provided to the farmers.

TANGEDCO’s Reply

2.126 The agricultural consumption submitted in the tariff petition is based on 5% sample

meter reading as per the methodology adopted by the Hon’ble TNERC in its last tariff

order dated 30th March 2012.

2.127 Theft of power is least in Tamil Nadu. To reduce the theft of energy, at Regional level

17 enforcement squads under the control of the Inspector General of Police (IGP) is

operating and a Flying squad under the control of Chairman, TANGEDCO is

functioning. Squad comprising of Ex-servicemen are being utilized to detect the

power theft in the state.



June 2013

2.128 Distribution loss cannot be avoided which is around 20% now. To reduce the

distribution loss improvement work such as establishment of substation and

strengthening of lines are being taken.

Commission’s View

2.129 The Commission initiated suo-motu proceedings against TANGEDCO for non

compliance in the matter of T&D loss determination as directed by it and the Hon’ble

APTEL. The Commission in the absence of scientific study for loss determination,

has fixed the T&D loss level at 16.4% for FY 2013-14 and has clarified that it shall

assume loss percentage at 16% and 15.6% for FY 2014-15 and FY 2015-16

respectively, if necessary scientific study is not done by TANGEDCO.

2.130 The Commission would also like to clarify that agriculture related and allied activities

viz. growing vegetables, fish culture, and poultry farming are recognized under

agriculture and they are permitted to use water pumped from wells located close to the

farmhouse as per the last tariff order and it will not amount to theft.

2.131 Licensee should note that wrong theft booking should be avoided.

7. Interest Expenses


2.132 Interest on borrowing from various financial institutions is on higher rate. The

payment of interest should be at nominal rate. No interest shall be allowed on

borrowings made to make up for losses. No return on shareholders’ funds should be

provided.

2.133 In providing interest on current assets, receivables at 2 months sale value is assumed.

This is over stated. From the Balance Sheet of TANGEDCO it can be ascertained that

the consumer’s deposits are more than cover the accounts receivables.

2.134 The High Tension consumers are provided only 7 days from the date of the bill for

payment of the consumption charges for the previous month. Further they are

required to keep a deposit equivalent to two month’s consumption charges. Therefore

the interest on the HT receivables should be totally disallowed.

2.135 In case of LT, domestic consumers the bill is made for once in two months. Which

means on the average there is an outstanding of one month. Hence for LT

Receivables, should be estimated on one month and interest should be allowed on that

quantum alone.

2.136 For inventory, stock of coal is assumed at 2 months value of consumption, but

actually the generating stations are maintaining fuel stock for not more than 10 days

consumption. Hence no interest need to be allowed.



June 2013

TANGEDCO’s Reply

2.137 The interest on the loan has been calculated considering the loans allocated to TANGEDCO at the time of segregation of erstwhile TNEB and based on such

notified transfer scheme, it is the obligation of TANGEDCO to service such debts and

repay them along with the interest. Hence, TANGEDCO has claimed the interest

amount on actual basis.

2.138 Return on Equity for TANGEDCO for the control period has been calculated based on the average equity for the corresponding year. This has been done in line with the

TNERC Regulations. The normative rate of return on equity has been taken at 14%.

Commission’s View

2.139 In the last tariff order Commission has approved the total interest expenses

corresponding to actual long term and short term loans borrowed by TANGEDCO. In

the current Petition TANGEDCO has claimed the interest expenses corresponding to

only long term loans and separately claimed the interest on working capital as per

norms specified by TNERC in its tariff regulations 2005.

2.140 TANGEDCO has adopted the following approach for segregation of interest to the generating plant / station and distribution function:

a. Project specific loans for generation and distribution is initially allotted to each of the respective project and considered as opening loan balance for that

particular project.

b. Large quantum of generic loans which cannot be differentiated into project

specific loans and interest paid on these loans is bifurcated as per opening

gross block of generation and distribution notified as per transfer scheme.

2.141 In response to Commission’s query, TANGEDCO has revised the long term loans and

segregated these loans among those borrowed for capital projects, repayment of

existing loans and funding the revenue expenditure.

2.142 In its last order Commission has stated that there is a lack of differentiation between

the capital account and the revenue account. In the revised submission TANGEDCO

has again included the borrowings corresponding to revenue account in capital

account. However, Commission is treating the revenue and capital account separately.



June 2013

8. Regulatory Asset


2.143 TANGEDCO has prayed for approving Regulatory asset. TANGEDCO’s proposal is also not in consonance with Regulation 13 of the Tariff Regulations. The

circumstances for treatment of regulatory asset would arise mostly during natural

causes or force majeure conditions and that it can be only for a limited period not

exceeding 3 years preferably within the control period. The reason given by

TANGEDCO is Para 6.3.3 that is “present critical power position” is not a force

majeure position.

2.144 The Regulatory Assets already created had been done for the same invalid reason.

Therefore, the Regulatory Asset already created should also be withdrawn.

TANGEDCO should be directed to take up the matter with Govt of Tamil Nadu as

part of the Financial Restructuring Plan it is implementing.

2.145 Creation of Regulatory Assets as per request of TANGEDCO is against the ATE Order of 28.7.2011 and also against the Tariff Policy. Therefore the Commission

should reject the plea.

2.146 Recovery of Regulatory Asset in future tariff petitions is not just as TANGEDCO is not supplying power equitably to all consumers. Selected consumers and Chennai

region have been exempted from Load shedding. The higher cost incurred for

purchase of power by TANGEDCO is for only these preferred consumers. The other

consumers who managed with costly Diesel Generators should not be burdened with

additional tariff.

2.147 No justifiable reasons have been attributed by TANGEDCO as to why it has not come

forward with a sizeable retail tariff revision in the petition. TANGEDCO’s reasoning

that the deficit can be treated as ‘Regulatory Assets’ – deferred expenditure – to be

made good in future from consumers should not be accepted by the Commission.

2.148 TANGEDCO has not made any road map for recovery of Regulatory Assets despite

approval from GoTN for amortization.

2.149 Regulatory Assets should be recouped slowly and incrementally. Clear road map to be

presented by the Commission to recoup the Regulatory Assets and introduce the

concept of Regulatory liabilities.

2.150 TANGEDCO should be directed to create special Regulatory Liability for which they should submit a strategic plan. Increase HT & LT tariff in all categories for assessing

the Regulated Liability for which no adjustment must be allowed

2.151 Commission not to accept treating the deficit of TANGEDCO as Regulatory Asset

2.152 TANGEDCO has not met the Performance Standards laid in TO 1 of 2013. Hence,

claim for Regulatory Assets should not be accepted.



June 2013

2.153 Subsidy of 30% for Regulatory Assets accepted by GoTN for 2012-13 not shown in

Table 109. No justification given by TANGEDCO for converting losses into RA and

TANGEDCO request should be rejected.

2.154 Tariff Policy 5.3(h)(4) is against the proposal of TANGEDCO to burden future consumers with past losses with not seeking tariff increase for other categories for the

reasons in 6.3.2 of their petition.

2.155 Regulatory assets should not exceed than what is approved in the true up. Interest on this should also be waived

2.156 As per ATE Order, financial gap for any year should be considered for tariff revision and not passed on as Regulatory Asset

2.157 Requested not to permit the TANGEDCO to create Regulatory Asset as per

(OP1/2011, dt.11.11.11) of APTEL order and to pass on burden to consumer for the

ensuing year.

2.158 TNERC must determine the tariff for other categories, other than the one requested by

TANGEDCO, to the extent it can do reasonably on suo motu basis and create a

special “Regulatory Liability” of the likely revenue arising on such determination; the

extent of the ‘regulatory assets’ requested in this petition by TANGEDCO can be

reduced by this amount;

2.159 It is the responsibility of TANGEDCO to wipeout this liability first, before it can commence the recovery process on regulatory assets; TNERC must direct the

TANGEDCO to submit a strategic plan for wiping out the ‘Regulatory Liability’

created for its approval, measuring and monitoring.

2.160 Find out ways and means to recover the past losses from FY 2013-14 onwards instead

of postponing the recovery to ensuing years.

TANGEDCO’s Reply

2.161 TANGEDCO has proposed for the approval of Regulatory Asset based on the methodology adopted by the Hon’ble TNERC in tariff order dated 30th March 2012.

2.162 The Hon’ble Appellate Tribunal for Electricity in its order dated 09.04.2013 has upheld the creation of regulatory asset in Tariff Order No 1 of 2012 dated 30.03.2012,

in appeal No:257 of 2012 filed by the Southern India Mills Association, Coimbatore.

2.163 The creation of regulatory asset has been requested so as to recover the expenditure already incurred in a deferred manner in order to avoid tariff shock to consumers. If

the same is rejected there will be huge financial burden on the TANGEDCO and the

services to consumers will also be affected. This will cause irreparable loss to

TANGEDCO and consumers.



June 2013

Commission’s View

2.164 Commission does not agree with the proposition of creating regulatory liability as

none of its regulations allows for such creation.

2.165 The issue of Regulatory Asset is dealt with in Regulation of the TNERC (Terms and

Conditions of Tariff) Regulations 2005. This issue was also the subject matter of

appeal before the Hon’ble Appellate Tribunal for Electricity arising out of the

Commission’s Order No. 3 of 2010 dated 31-07-2010 and the decision of the

Appellate Tribunal for Electricity is extracted below:-

8.4. Let us first examine the provisions of the Tariff Policy in this regard. The relevant

extracts are as under:

“8.2.2. The facility of a regulatory asset has been adopted by some Regulatory

Commissions in the past to limit tariff impact in a particular year. This should

be done only as exception, and subject to the following guidelines:

a. The circumstances should be clearly defined through regulations, and should only include natural causes or force majeure conditions. Under

business as usual conditions, the opening balances of uncovered gap must

be covered through transition financing arrangement or capital

restructuring;

b. Carrying cost of Regulatory Asset should be allowed to the utilities;

c. Recovery of Regulatory Asset should be time-bound and within a period

not exceeding three years at the most and preferably within control

period;

d. The use of the facility of Regulatory Asset should not be repetitive.

e. In cases where regulatory asset is proposed to be adopted, it should be

ensured that the return on equity should not become unreasonably low in

any year so that the capability of the licensee to borrow is not adversely

affected”.

The Tariff Policy stipulates creation of the regulatory asset only as an

exception subject to the guidelines specified above. According to the

guidelines the circumstances under which the regulatory assets should be

created are under natural causes or force majeure conditions.

8.5. Let us now examine Regulation 13 of the 2005 Tariff Regulations of the State

Commission:

“13. Regulatory Asset:



June 2013

(1) Wherever the licensee could not fully recover the reasonably incurred cost at

the tariff allowed with his best effort after achieving the benchmark standards

for the reasons beyond his control under natural calamities and force majeure

conditions and consequently there is a revenue shortfall and if the

Commission is satisfied with such conditions, the Commission shall treat such

revenue shortfall as Regulatory Asset.

(2) The regulatory asset shall first be adjusted against the contingency reserve. The balance regulatory asset, if any, will be allowed to be recovered within a

period of three years as decided by the Commission.

(3) The licensee shall intimate the Commission then and there when such contingency arises.

(4) Any un-recovered gap at the beginning must be covered through transition financing arrangement or capital restructuring”.

(5) Under the State Commission’s Regulations also the regulatory asset is to be created when the licensee is not able to recover the reasonably incurred cost

for reasons beyond its control under natural calamities and force majeure

conditions. Further, the regulatory asset has to be recovered within a period

of three years. Admittedly, in the present case occurrence of natural

calamities and force majeure conditions did not arise.

8.6. Now we shall examine the findings of the State Commission in this regard. The

relevant extracts from the impugned order under paragraph 9.15.3 (9) are

reproduced in paragraph 7.4 above.

8.7. The State Commission has justified creation of the regulatory asset for the

anticipated revenue gap during the control period to prevent the tariff shock.

The order does not clearly state the total amount of the regulatory asset created but if

we add up the projected revenue gap of Rs. 7904.04 Cr., Rs. 6062.24 Cr. and Rs.

3489.18 Cr. for FY 2010-11, 2011-12 and 2012-13 respectively it totals upto Rs.

17445.46 Cr. It is also noticed that the State Commission has also not provided for

any carrying cost on the regulatory asset and the programme for recovery of the

amount to be taken as expenses in future tariff.

8.8. We are of the opinion that the regulatory asset created by the State Commission

is not in consonance with the Tariff Policy and its own Regulations. Moreover, the

impugned order does not provide for recovery of the regulatory assets with the

carrying cost as envisaged in the Regulations and the Tariff Policy.

8.9. The State Commission has justified creation of regulatory asset for avoiding tariff

shock. Now, let us examine the increase in tariff decided in the impugned order. We

reproduce below the response of TNEB (Respondent-1) recorded in the impugned

order regarding the tariff increase.



June 2013

“2.27.2 Domestic users consume 15 million units/ day. Individual consumption has

already crossed more than 1000 units, whereas the per capita consumption envisaged

in the 11th Plan is 1000 units only. Last year, the average cost of supply was

Rs.4.70/unit and it is expected to increase to Rs.4.90 / unit. Ason date, the average

recovery is Rs.2.60/unit. For every consumer, the average subsidy is Rs.2.30/unit. In

Tamil Nadu, except Commercial and Industry, other categories come under

subsidized tariff. Out of 2.09 crores consumers, no hike is proposed for 1.65 crores

consumers. Out of 1.50 crores domestic consumers, there is no hike for 1.40 crores

consumers. Hike is proposed for only 10 to 12 lakh domestic consumers. The average

increase is 65 ps. Only”.

Thus, despite huge gap between average cost of supply and average recovery, TNEB

had proposed no hike in tariff for 1.65 crores consumers out of total 2.09 crores

consumers i.e. tariff was not to be increased for about 79% of the consumers. Out of

1.5 Crores domestic consumers no hike was proposed for 1.4 Crores (93%)

consumers. In fact, the first respondent withdrew its own petition for tariff increase

for domestic consumers consuming from 201 units to 600 units biomonthly and the

State Commission permitted the same. In its response to the comments of the

stakeholder the State Commission has recorded in para 2.29.1(6) of the impugned

order that it had proposed to increase tariff only to certain categories of consumers.

We do not understand why no tariff was increased for majority of consumers even

though the Respondent no. 1 was facing huge revenue gap while it had proposed to

carry out a number of system improvement works for which funds were required and

considering that the tariff was being increased after a span of seven years. When the

tariff has not been increased for most of the consumers, how the creation of the

regulatory asset of such high magnitude, that too without any direction for its

amortization, can be justified on the pretext of avoiding tariff shock?

8.10. Now, the question arises whether the creation of the regulatory asset is in the

interest of the distribution company and the consumers. The respondent no. 1 will

have to raise debt to meet its revenue shortfall for meeting its O&M expenses, power

purchase costs and system augmentation works. It is not understood how the

respondent no. 1 will service its debts when no recovery of the regulatory asset and

carrying cost has been allowed in the ARR. Thus, the respondent no. 1 will suffer with

cash flow problem affecting its operations and power procurement which will also

have an adverse effect on maintaining a reliable power supply to the consumers.

Thus, creation of the regulatory asset will neither be in the interest of the respondent

no. 1 nor the consumers.”



June 2013

2.166 The Commission in Order No. 3 dated 31-07-2010 and Order No.1 dated 30-03-2012

had extensively discussed the reasons for the accumulated losses of the utility. The

losses of TNEB have accumulated over a period of more than ten years. While the

load has been growing continuously, the capacity addition has not kept pace with the

increasing demand. Consequently power was purchased from the market. The tariff

has not kept pace with the increase in costs with tariff revisions only in 2003 and then

in 2010. The gap up to the unbundling of the TNEB on 1-11-2010 is Rs. 17207.30

Crores. The Commission had expressed a view earlier that the accumulated losses up

to the date of unbundling will have to be dealt with in accordance with Para 5.4.3 of

the National Electricity Policy and Tariff Policy. The provisions of the National

Electricity Policy and Tariff Policy envisages that the gap at the time of unbundling

will have to be sorted out by financial restructuring and support from the Government

rather than passing on the accumulated losses to the successor entities. The intention

of the Tariff Policy is to allow the unbundled utilities to start on a clean slate.

Accordingly, this Commission leaves the matter of the accumulated losses up to the

date of unbundling for resolution by the Government of Tamil Nadu.

2.167 The Commission’s suggestion to Government of Tamil Nadu in this regard is that

such restructuring of successor entities should not result in increase in tariff to

consumers. The TANGEDCO and TANTRANSCO have also not claimed any relief

of account of accumulated losses prior to unbundling on 1-11-2010 in this tariff

petition.

2.168 In the previous tariff order Commission was concerned with creation of Rs. 24762 Crs

Regulatory Asset especially when the same was to be amortized in the next three to

five years. The Commission with a view that support of State/Central Government

will also be required to be assessed in dealing with such large Regulatory assets,

addressed a letter for obtaining the view of Government of Tamil Nadu in this matter.

Particularly the Commission requested if the Government could absorb the

Regulatory asset in its entirety or in part so as to reduce the burden on the consumers.

2.169 Government has informed that they have in-principle agreed with the request of the

Commission for amortization of regulatory asset. Government has also informed that

the exact details and mechanism will be worked out in conjunction with tariff revision

and TANGEDCOs improvement due to internal savings.

2.170 The issue of Regulatory Asset was again raised in Appeal No. 257 of 2012 by SIMA

and Hon’ble APTEL in its order dated 9th April 2013 did not find any infirmity in the

Tariff Order No. 1 of 2012 date 30th March 2012 issued by the Commission.



June 2013

2.171 However TANGEDCO in its petition has revised the Regulatory Asset from the date

of unbundling i.e., with effect from 01-11-2010 and up to the end of this financial

year i.e. upto 31-03-2013, the proposed revenue gap is Rs. 40,718 Crores. Of which

TANGEDCO proposes to recover Rs. 973 Crore through a nominal tariff hike.

TANGEDCO proposes in its petition that the remaining gap of Rs. 39,774 Crores may

be allowed to be recovered in the ensuing tariff petition, from the consumer in the

deferred years so that there is no tariff shock for the consumers. TANGEDCO

requested to approve the revised Regulatory Assets of Rs 39,744 Crores by treating

the present critical power position as force majeure position as per tariff regulation

and based on the revised gaps and after adjusting the tariff hike as proposed in the

given petition.

2.172 The ARR of TANGEDCO for the past years as well as the current years has been reviewed by the Commission and the revenue gap is reworked as detailed in Chapter

A3. The amount involved being significant in nature and if the same is amortized by

way of tariff hike the impact on the consumer would be huge resulting in a tariff

shock to almost all the consumers for the next five years.

2.173 Based on the provisional numbers of FY 12 and FY 13, Commission arrived at an

estimate for regulatory asset and the treatment for amortization of the Regulatory

Asset has been discussed in Chapter A5.

2.174 Commission has received the letter (Ms) No. 59/C2/2012 dated 7th June 2013 from

GoTN on amortization of regulatory asset and after reviewing the letter Commission

has worked out the amortization of regulatory asset.

9. Cross Subsidy, Cost to Serve and Average Cost of Supply


2.175 Tariff payable for BPL category to be atleast 50% of average cost of supply as per

NEP 2006. TNERC should ensure that even for subsidised category of consumers

atleast 50% of the supply should be recovered. Thus tariff for no category should be

less than 3.14Rs/unit.

2.176 Commission to notify road map for reduction of cross subsidy to be within + 20% of

average cost of supply

2.177 The guidelines issued by the GoI, Electricity Act 2003, and policy guidelines and directions given by Appellate Tribunal have not been taken into cognizance. While

the Average Cost of Supply is Rs 6.27 per kWhr, the average realization is only Rs

4.80 per kWhr. Only for 7 categories of consumers will pay more than the average

cost of supply. They would be consuming 19.7% of the energy sold and pay 30.7% of

the revenue earned



June 2013

2.178 It is obvious that these categories consume 12,601 MUs and pay Rs 9436 Crores,

which is an average of Rs 7.48 per kWhr. These are the subsidizing categories. The

realization from them is Rs 7.48 per unit while the Average Cost of Supply 6.27 per

unit and Average Realisation is only Rs 4.80 per unit. Consumers will be overly

burdened in this arrangement

2.179 Commission to reduce the cross subsidy element in existing tariff of all subsidizing

consumers

2.180 Cross subsidy treatment should be in consonance to provisions of EA 2003, NEP,

NTP and directives of ATE.

2.181 G.O. Ms. No.79 dt 11.7.2012 squashed by Single Judge. Appeal by TANGEDCO

before Division Bench. Appropriate forum to determine imposition of cross subsidy

surcharge is the Commission.

2.182 Cross Subsidy should be calculated on the marginal cost of power.

2.183 Commission should reduce the cross subsidy element in existing tariff of all

subsidizing consumers.

2.184 Cost to serve, cross subsidy surcharges, peak hour and off peak hour charges shall be fixed as per the Order of the APTEL.

2.185 TNERC has stipulated that the cross subsidy has to be computed as difference

between Cost to Serve a category of consumers and average tariff realization of that

category

2.186 The treatment of cross subsidies and options available to address the cross subsidy

reduction issue have to be in consonance with the provisions of the Electricity Act

2003, the National Electricity Policy (NEP), the National Tariff Policy (NTP) and the

decisions pronounced by Appellate Tribunal for Electricity (APTEL).

2.187 Based on the legal and policy frame work, applicable cross subsidy can be determined

and its reduction over a period should be indicated. TNERC has to notify a road map

along with intermediate milestones for reduction of cross subsidy to be within +20%

of the average cost of supply.

2.188 As per sec. 61 of the Electricity Act, 2003 and National Tariff Policy the tariff should be fixed at the rate of cost of supply.

TANGEDCO’s Reply

2.189 The cost to serve model with the detailed report has been submitted along with the

tariff petition for calculating voltage wise cost of supply and cross subsidy.



June 2013

Commission’s View

2.190 The three aspects are inter-related and have been dealt with in detail in tariff order No 1 of 2012. However Commission is reiterating the approach towards the three issues.

The provisions regarding these three issues are extensively covered in the Order of

Hon’ble Appellate Tribunal of Electricity dated 11th June 2012 in Appeal Nos. 57 of

2008, 155 of of 2007, 125 of 2008, 45 of 2010, 40 of 2010, 196 of 2009, 199 of 2009,

163 of 2010, 6 of 2011 and 144 of 2010. Para 40 of the said order is relevant and is

extracted below:

“17. Section 61(g) of the 2003 Act stipulates that the tariff should progressively

reflect the cost of supply and cross subsidies should be reduced within the time period

specified by the State Commission. The Tariff Policy stipulates the target for

achieving this objective latest by the end of year 2010-11, such that the tariffs are

within ± 20% of the average cost of supply. In this connection, it would be worthwhile

to examine the original provision of the Section 61(g). The original provision of

Section 61(g) “the tariff progressively reflects the cost of supply of electricity and

also, reduces and eliminates cross subsidies within the period to be specified by the

Appropriate Commission” was replaced by “the tariff progressively reflects the cost

of supply of electricity and also reduces cross subsidies in the manner specified by the

Appropriate Commission” by an amendment under Electricity (Amendment) Act,

2007 w.e.f. 15.6.2007. Thus the intention of the Parliament in amending the above

provisions of the Act by removing provision for elimination of cross subsidies appears

to be that the cross subsidies may be reduced but may not have to be eliminated. The

tariff should progressively reflect the cost of supply but at the same time the cross

subsidy, though may be reduced, may not be eliminated. If strict commercial

principles are followed, then the tariffs have to be based on the cost to supply a

consumer category. However, it is not the intent of the Act after the amendment in the

year 2007 (Act 26 of 2007) that the tariff should be the mirror image of the cost of

supply of electricity to a category of consumer.

18. Section 62(2) provides for the factors on which the tariffs of the various

consumers can be differentiated. Some of these factors like load factor, power factor,

voltage, total electricity consumption during any specified period or time or

geographical position also affects the cost of supply to the consumer. Due weightage

can be given in the tariffs to these factor to differentiate the tariffs.

19. The National Electricity Policy provides for reducing the cross subsidies

progressively and gradually. The gradual reduction is envisaged to avoid tariff shock

to the subsidized categories of consumers. It also provides for subsidized tariff for

consumers below poverty line for minimum level of support. Cross subsidy for such

categories of consumers has to be necessarily provided by the subsidizing consumers.

20. The Tariff Policy clearly stipulates that for achieving the objective, the State

Commission has not been able to establish that the tariff progressively reflects the

cost of supply of electricity, latest by the end of the year 2010-11, the tariffs should be

within ±20% of the average cost of supply, for which the State Commission would

notify a road-map. The road map would also have intermediate milestones for

reduction of cross subsidy.



June 2013

21. According to the Tariff Regulation 7 (c) (iii) of the State Commission the cross

subsidy has to be computed as difference between cost-to-serve a category of

consumer and average tariff realization of that category.

22. After cogent reading of all the above provisions of the Act, the Policy and the

Regulations we infer the following:

i) The cross subsidy for a consumer category is the difference between cost to

serve that category of consumers and average tariff realization of that

category of consumers. While the cross-subsidies have to be reduced

progressively and gradually to avoid tariff shock to the subsidized categories,

the cross-subsidies may not be eliminated.

ii) The tariff for different categories of consumer may progressively reflect the cost of electricity to the consumer category but may not be a mirror image of

cost to supply to the respective consumer categories.

iii) Tariff for consumers below the poverty line will be at least 50% of the average

cost of supply.

iv) The tariffs should be within ±20% of the average cost of supply by the end of

2010-11 to achieve the objective that the tariff progressively reflects the cost

of supply of electricity.

v) The cross subsidies may gradually be reduced but should not be increased for a category of subsidizing consumer.

vi) The tariffs can be differentiated according to the consumer’s load factor, power factor, voltage, total consumption of electricity during specified period

or the time or the geographical location, the nature of supply and the purpose

for which electricity is required.

Thus, if the cross subsidy calculated on the basis of cost of supply to the consumer

category is not increased but reduced gradually, the tariff of consumer categories is

within ±20% of the average cost of supply except the consumers below the poverty

line, tariffs of different categories of consumers are differentiated only according to

the factors given in Section 62(3) and there is no tariff shock to any category of

consumer, no prejudice would have been caused to any category of consumers with

regard to the issues of cross subsidy and cost of supply raised in this appeal.”

“29. The State Commission has indicated in the impugned order that the voltagewise

cost determination is the first step in determining the consumer-wise cost of supply

but has expressed difficulties in determination of voltage-wise cost of supply due to

non-segregation of costs incurred by the licensee related to different voltage levels

and determination of technical and commercial losses at different voltage levels due

to non-availability of meters. The State Commission has also noted that the data

submitted by the distribution licensee does not have technical or commercial data

support.



June 2013

30. It is regretted that even after six years of formation of the Regulations data for the

distribution losses. The position of metering in the distribution system of respondent

no. 2 is pathetic. Only about 1/4th of 11 KV feeders have been metered and very small

numbers of transformers have been provided with meters.

Only 68% of the consumer meters are functional in the distribution system as

indicated in Table-37 of the impugned order. It is also noticed that a large number of

meters are old electro mechanical meter which are not functioning.

This is in contravention to Section 55 of the Act. Section 55(1) specifies that no

licensee shall supply electricity after the expiry of two years from the appointed data,

except through installation of a correct meter in accordance with the Regulations of

the Central Electricity Authority. According to Section 55(2) meters have to be

provided for the purpose of accounting and audit. According to Section 8.2.1 (2) of

the Tariff Policy, the State Commission has to undertake independent assessment of

baseline data for various parameters for every distribution circle of the licensee and

this exercise should be completed by March, 2007. In our opinion the State

Commission can not be a silent spectator to the violation of the provisions of the Act.

In view of large scale installation of meters, the State Commission should immediately

direct the distribution licensee to submit a capital scheme for installation of consumer

and energy audit meters including replacement of defective energy meters with the

correct meters within a reasonable time schedule to be decided by the State

Commission. The State Commission may ensure that the meters are installed by the

distribution licensee according to the approved metering scheme and the specified

schedule. In the meantime, the State Commission should institute system studies for

the distribution system with the available load data to assess the technical

distribution losses at different voltage levels.

31. We appreciate that the determination of cost of supply to different categories of

consumers is a difficult exercise in view of non-availability of metering data and

segregation of the network costs. However, it will not be prudent to wait indefinitely

for availability of the entire data and it would be advisable to initiate a simple

formulation which could take into account the major cost element to a great extent

reflect the cost of supply. There is no need to make distinction between the

distribution charges of identical consumers connected at different nodes in the

distribution network. It would be adequate to determine the voltagewise cost of supply

taking into account the major cost element which would be applicable to all the

categories of consumers connected to the same voltage level at different locations in

the distribution system. Since the State Commission has expressed difficulties in

determining voltage wise cost of supply, we would like to give necessary directions in

this regard.



June 2013

32. Ideally, the network costs can be split into the partial costs of the different voltage

level and the cost of supply at a particular voltage level is the cost at that voltage

level and upstream network. However, in the absence of segregated network costs, it

would be prudent to work out the voltage-wise cost of supply taking into account the

distribution losses at different voltage levels as a first major step in the right

direction. As power purchase cost is a major component of the tariff, apportioning the

power purchase cost at different voltage levels taking into account the distribution

losses at the relevant voltage level and the upstream system will facilitate

determination of voltage wise cost of supply, though not very accurate, but a simple

and practical method to reflect the actual cost of supply.

33. The technical distribution system losses in the distribution network can be

assessed by carrying out system studies based on the available load data. Some

difficulty might be faced in reflecting the entire distribution system at 11 KV and 0.4

KV due to vastness of data. This could be simplified by carrying out field studies with

representative feeders of the various consumer mix prevailing in the distribution

system. However, the actual distribution losses allowed in the ARR which include the

commercial losses will be more than the technical losses determined by the system

studies. Therefore, the difference between the losses allowed in the ARR and that

determined by the system studies may have to be apportioned to different voltage

levels in proportion to the annual gross energy consumption at the respective voltage

level. The annual gross energy consumption at a voltage level will be the sum of

energy consumption of all consumer categories connected at that voltage plus the

technical distribution losses corresponding to that voltage level as worked out by

system studies. In this manner, the total losses allowed in the ARR can be apportioned

to different voltage levels including the EHT consumers directly connected to the

transmission system of GRIDCO. The cost of supply of the appellant’s category who

are connected to the 220/132 KV voltage may have zero technical losses but will have

a component of apportioned distribution losses due to difference between the loss

level allowed in ARR (which includes commercial losses) and the technical losses

determined by the system studies, which they have to bear as consumers of the

distribution licensee.

34. Thus Power Purchase Cost which is the major component of tariff can be

segregated for different voltage levels taking into account the transmission and

distribution losses, both commercial and technical, for the relevant voltage level and

upstream system. As segregated network costs are not available, all the other costs

such as Return on Equity, Interest on Loan, depreciation, interest on working capital

and O&M costs can be pooled and apportioned equitably, on pro-rata basis, to all the

voltage levels including the appellant’s category to determine the cost of supply.

Segregating Power Purchase cost taking into account voltage-wise transmission and

distribution losses will be a major step in the right direction for determining the

actual cost of supply to various consumer categories. All consumer categories

connected to the same voltage will have the same cost of supply. Further, refinements

in formulation for cost of supply can be done gradually when more data is available.”



June 2013

2.191 Cost to Serve, Average Cost of Supply and Cross Subsidy are also discussed extensively in the above referred Order of the Hon’ble Appellate Tribunal of

Electricity in paragraphs, 36, 37, 38 and 39. The Hon’ble Appellate Tribunal of

Electricity had expressed the opinion that consequent to the Electricity (Amendment)

Act 2003 with effect from 15-6-2007 elimination of cross subsidy has been omitted

which implies that the tariff for a particular category of consumers need not be the

mirror image of cost to serve.

2.192 Provisions of Tariff policy envisage that the tariff for various categories of consumers

shall be within +/- 20% of the average cost of service. A conjoint reading of the

Electricity Act 2003 after the amendment in the year 2007 with the other provisions of

the Act as well as the Tariff Policy, the intent of the Act seems to be that the tariff

need not be the mirror image of the cost of supply of electricity to a category of

consumers. From the applicable portion of the Judgment which is contained in para 22

of the decision of the Hon’ble Appellate Tribunal of Electricity in Appeals No. 102,

103 and 112 of 2010 rendered on 30th May 2011, it can be seen that the following are

the tests for deciding the tariff in compliance of the Electricity Act, Tariff Policy and

Regulations of the Commission.

(a) As a first major step in the right direction, the voltage wise cost of supply shall

be calculated based on the available data.

(b) The Cost of service for each category of consumer will have to be worked out

separately.

(c) The cross subsidy should be going down from year to year.

(d) The tariff fixed for various categories should be within +/- 20% of the average

cost of service.

(e) Tariff may not be a mirror image of cost to supply to the respective consumer

categories.

(f) Tariff for different categories of consumers are differentiated only according

to the factors given in Section 62(3).

(g) There is no tariff shock to any category of consumers.

2.193 If the above are carried out and the tariff decided accordingly, no prejudice would have been caused to any category of consumers with regard to the issues of cross-

subsidy and cost of supply.

2.194 Commission in its last tariff order has directed TANGEDCO to undertake data

collection for computing accurate cost of supply and submit a study report computing

the consumer category wise and voltage wise cost to serve.



June 2013

2.195 TANGEDCO in compliance to the above directive has undertaken a technical study

and computed the category wise cost of service but has stated its inability to compute

voltage wise cost to serve as its accounting system are not robust enough to capture

cost details voltage wise.

2.196 The Commission would like to continue the procedure adopted last year recognising

the importance of carrying out such an exercise in detail which will enable to test the

retail tariff. Commission based on its view in the last tariff order, that it would be

advisable to initiate a simple formulation which could take into account the major cost

element to reflect the cost of supply, has estimated voltage wise cost to serve based

on the Embedded cost method, the details of which are elaborated in Chapter A5.

2.197 Even though TANGEDCO has attempted to calculate cost to serve, it has been

unsuccessful in doing so at various voltage classes. For arriving at realistic and

accurate costs an extensive data collection exercise has to be carried out by

TANGEDCO which will include a 12-month load profile study of each voltage wise

consumer category. Therefore the Commission once again directs TANGEDCO to

submit a revised and detailed study report on computation of voltage wise ‘cost to

serve’ (CoS) along with the basis of allocation of different costs and losses to various

voltage levels. This shall be examined by the Commission and approved with such

modifications as it may deem fit or consider a better alternate computation. The

Commission also directs TANGEDCO to submit the action taken report within 90

days of the issuance of this order.

10. Merit Order Despatch


2.198 SPCL and MPCL both have subsisting Power Purchase Agreements with

TANGEDCO for supply of power from their power plants which operate on Low

Sulphur Heavy Stock/Low Sulphur Furnace Oil.

2.199 SPCL and MPCL in their detailed comments mentioned that TANGEDCO has sought

for approval of only fixed costs of the respective plants which is contrary to the

provisions of PPAs in existence. They pointed out that TANGEDCO has to operate

the power plants in accordance with the Article 6.3 of PPA.

2.200 They have been cooperating with TANGEDCO in operating the plant at technically feasible minimum load of 13MW to keep the fuel warm.

2.201 SPCL is totally dependent on TANGEDCO as TANGEDCO is the sole purchaser of power and has referred to various clauses of PPA. TANGEDCO cannot issue zero

power instructions as per PPA provisions

2.202 Both have stated that both they have filed petitions DRP 26 and DRP 27 of 2012 seeking an order restraining TANGEDCO from issuing instructions to SPCL to back

down generation of SPCL and MPCL plants. The petition has been heard by the

Commission and pending for admission



June 2013

2.203 TANGEDCO has been dispatching the plant to meet its immediate requirements and

has at times issued zero dispatch instructions without regard to the technical

requirements of the plants.

2.204 SPCL and MPCL have requested the Commission to consider appropriate variable

cost for plants as per the PPAs. Order that the approved tariff is subject to the decision

of the Commission in DRP 27 of 2012 filed by MPC. Alternatively, if zero / part

power dispatch instructions is issued by TANGEDCO, it should be limited to max of

4 hrs of zero power followed by a minimum of 8 hrs of technical feasible load of 13

MW single engine operation.

TANGEDCO’s Reply

2.205 Hon’ble TNERC in accordance with above Terms and Conditions of Tariff

Regulations, has determined the power purchase cost and gave the Merit Order

Ranking for all available sources from which energy is available in FY 2012-13 under

Table 192 of Tariff order dated 30.03.2012. According to clause 7.1.2.f. of Tariff

order, Hon’ble TNERC listed M/s PPN, M/s SPCL, M/s MPCL & M/s GMR under

the plants which are not scheduled as per Merit Order Dispatch, with a liberty to

approach Commission in advance if they are dispatched outside Merit order.

2.206 Based on the above Tariff order and Grid Code of Hon’ble Commission, M/s SPC and

M/s MPC are being given zero dispatch instruction from 01.04.2012 till date, based

on the merit order dispatch by SLDC. During the zero dispatch period, M/s SPC and

M/s MPC are allowed fixed charges only, as directed by Commission.

2.207 Further, whenever there is a shortage of power, M/s SPC and M/s MPC are being

dispatched outside merit order by SLDC, and ratification / approval of this dispatch is

obtained from the Hon’ble Commission then and there by TANGEDCO.

2.208 Against the zero dispatch instructions issued by SLDC as per Hon’ble TNERC’s Tariff order, M/s SPC & M/s MPC have raised certain disputes such as directing

TANGEDCO to issue dispatch instructions based on the PPA, to pay the cost of

additional start –stop due to zero power generation, cost of additional fuel for start-up

boiler during zero dispatch etc and filed a DRP before the Hon’ble TNERC vide DRP

No.26 of 2012 and DRP No. 27 of 2012 and the DRPs are yet to be admitted by the

Commission. Preliminary objection has been filed by the TANGEDCO in the above

DRPs.

2.209 As per Article 12 of the PPA on Force Majeure and specified that directions of

Hon’ble Commission in Tariff Order No.1 dated 30.03.2012 vide para 7.1.20, fall

under the Direct Indian Political Event of Force majeure Clause of PPA and therefore

Zero dispatch of power from M/s SPC or M/s MPC is not in violation of the terms of

PPA, as explained above.

2.210 Having established the zero dispatch concept under Force Majeure, now the payment

obligation of TANGEDCO during such Force Majeure shall be dealt, which is as

follows:



June 2013

Article.12.4 Continuing Payment Obligation: Force Majeure of PPA provides as

below:

a) “Upon the occurrence and during the continuance of any event of force Majeure, the Tariff and all other payment obligations of the Parties hereunder

shall continue to be payable as set forth below:

i) for Direct Indian Political Event the project is deemed to be operating at

the NPLF and full Fixed Charge Payment shall be paid by TNEB”

2.211 In FY 2013-14 when compared to FY 2012-13, the variable costs of M/s SPC or M/s

MPC is not likely to come down, but it is likely to increase only, taking market trend

of liquid fuel into consideration.

2.212 In view of the reasons explained above, for this FY 13-14 also, TANGEDCO has filed Tariff Petition & ARR mentioning zero dispatch for the high cost IPPs namely MPC,

SPC, GMR & PPN.

Commission’s View

2.213 Regulation 75(1) of the TNERC (Terms and Condition for Determination of Tariff)

Regulation 2005, specify the following:

“The Distribution Licensee shall procure power on least cost basis and strictly on

Merit Order Despatch and shall have flexibility to procure power from any source in

the country”.

2.214 Similar provision exists in the Tamil Nadu Electricity Grid Code as well as in

Electricity Act 2003.

2.215 In line with the provisions mentioned above Commission adopted the same approach

to allow the costs in its Orders TO No 3 of 2010 and TO NO 1 of 2012. In the matter

of the above mentioned orders, neither TANGEDCO nor the petitioners have raised

any objections previously on the applicability of merit order principles to their plants.

2.216 Commission understands that the issue of finding alternative for meeting the heating

requirement of fuel pipes and tanks etc in the event of Nil generation, is being taken

up with the IPPs by TANGEDCO so as to strictly follow the Commission’s tariff

order No. 1 of 2012 dated 30-3-2012 as submitted by TANGEDCO in the matter of

petition MP No 23 of 2012.

2.217 In addition the matters concerned to payment obligations or applicability of Articles

of a bilateral PPA are outside the purview of this petition. Hence the Commission

decides that the power purchase quantum for the second control period from M/s

SPCL and M/s MPCL will continue to be governed by Merit Order Despatch

principles.



June 2013

2.218 In cases where the Power Stations are to be despatched outside Merit Order,

TANGEDCO shall obtain approval of the Commission in advance by furnishing

reasons for such action. In case of emergencies TANGEDCO is permitted to resort to

such a practice but will approach the Commission within a week of such action along

with the reasons for such action.

2.219 MoD for the specific stakeholders viz M/s SPCL and M/s MPCL has been in vogue

from 1st April 2012. No specific violation of PPA has been cited by them and a

direction is being sought to follow the PPA. Alternatively a scheme of despatch is

proposed. Section 32(2)(a) of E-Act 2003 states that

“The State Load Despatch Centre shall - (a) be responsible for optimum scheduling

and despatch of electricity within a State, in accordance with the contracts entered

into with the licensees or the generating companies operating in that State;”

There is no merit for any direction from the Commission for following the provisions

of law. As and when there is a cause of action, the Petitioner may approach the

Commission for specific relief.

11. Cross Subsidy Surcharge


Average Billing Rate

2.220 TANGEDCO has proposed to maintain tariffs at the same levels for HT IA, HT IB,

HT IIB & HT III Consumers. Based on the Demand, Sales, Fixed charges and Energy

charges the average billing rate for these categories works out to Rs. 6.91, Rs. 6.34

Rs. 6.57 and Rs. 7.98 respectively.

2.221 These average billing rates have then been used by TANGEDCO in estimating the

cross subsidy surcharge applicable to consumer categories.

2.222 As per second proviso to Section 42(2) of the Electricity Act 2003, cross subsidy surcharge is to be utilised to meet the current level of cross subsidy meaning to

compensate the distribution licensee whose consumer moves to OA procurement for

the loss in revenue in excess of the cost of supply.

2.223 In Tamil Nadu, even when consumers in these categories move to procure power

through open access, demand charges are being paid by these consumers implying the

actual revenue loss to GEDCO is only on account of the energy charges.

2.224 Therefore, the applicable energy rate to the consumer is the appropriate value to use

in the formula specified in the Tariff Policy 2006 for calculation of CSS, as shown in

table above or revised energy tariff notified by the Hon’ble Commission.

2.225 The effective rate, which includes the demand charges as well, cannot be used, as

revenue on this account is NOT being lost to TANGEDCO due to consumers moving

to open access procurement of power.



June 2013

Marginal Cost

2.226 Further, we request the Hon’ble Commission to verify the power procurement

schedule for FY14 and re-estimate the merit order stack, to ensure that the

disallowance is from appropriate stations at the margin. Therefore, in computing

marginal cost of power, the Hon’ble Commission needs to correctly estimate the

quantum of disallowance and ensure that the merit order stack is correctly represented

Wheeling charges in CSS

2.227 Wheeling is defined in the Section 2(76) of EA2003 as

“wheeling” means the operation whereby the distribution system and associated

facilities of a transmission licensee or distribution licensee, as the case may be, are

used by another person for the conveyance of electricity on payment of charges to be

determined under section 62;

2.228 Further, Tariff Policy 2006 specifies that CSS should be calculated as the difference between tariff applicable to relevant category of consumers & the cost of distribution

licensee to supply electricity to this class of consumers, which clearly includes the

transmission cost as well

2.229 Further, the NTPO6 states that the cost to be borne by OA consumer includes

transmission costs.

2.230 As precedent, the Kerala SERC in its Order on ARR, ERC & Tariff for FY13 of

KSEB, has used cost of transmission alone for EHT (transmission voltage) consumers

and aggregate of transmission & distribution cost for HT (distribution voltage)

consumers in estimating cost of distribution licensee.

2.231 Therefore, we submit that the wheeling charges used in the formula to estimate CSS

should include the transmission charges as well, since these form a part of the costs

that the distribution licensee incurs to serve a consumer.

2.232 TNERC should deny TANGEDCO Cross Subsidy Surcharge as long as it is not able to meet the consumers’ demand.

2.233 For calculating the Cross Subsidy surcharge, 3 power generators (Source Table 113) has been taken. The logic of choosing them is to be explained. It appears that they do

not meet the criterion stipulated by tariff policy for this purpose. Further the

calculations in table 114 need to be verified with the formula given in Para 7.3.3.



June 2013

TANGEDCO’s Reply

Average Billing Rate

2.234 The cross subsidy proposed is being calculated on the basis of the formula laid down

by the Ministry of Power in Tariff Policy. As per the formula, the cross subsidy is the

difference between the tariff paid by the relevant category of consumers and the

average cost of supply including line loss and wheeling charges.

2.235 The tariff includes both energy and demand charges. Hence, the cross subsidy

surcharge is being calculated taking into account the demand charges payable by the

consumer also.

2.236 The Cross subsidy surcharge calculated by the TANGEDCO in its tariff petition filed before the Hon’ble TNERC is in line with the formula provided by the Ministry of

Power in Tariff Policy.

2.237 No Provisions are available in the Electricity Act 2003 and Rules and Regulations made there under to omit the demand charges while calculating the cross subsidy

surcharge.

Marginal Cost of Power

2.238 The Tariff Policy prescribed by the Ministry of power specifies the formula to

calculate Marginal cost/Variable cost to arrive at the Cross Subsidy Surcharges.

Accordingly, the Marginal cost/Variable costs are calculated.

Wheeling Charges

2.239 The cross subsidy is being calculated as per the formula notified by the Ministry of

Power in its Tariff Policy. In the Tariff Policy it has been specified to include only

power purchase cost, system loss and wheeling charges payable to distribution

licensee. Accordingly, the TANGEDCO has calculated the cross subsidy surcharge

considering the power purchase cost, system loss and wheeling charges. Hence, the

transmission charges could not be included in the cross subsidy surcharge calculation

as requested by the petitioner.

Non levy of CSS during R&C

2.240 The Government of Tamil Nadu has issued a government order vide G.O. No. 79

dated :11.07.2012 relating to levy of cross subsidy from the consumers who avail

supply from the generators other than TANGEDCO and from CPP without availing

the quota energy from TANGEDCO during the period when R & C measures are in

force. This levy of cross subsidy has been challenged by some of the consumers and

the matter is pending in the Hon’ble High court of Madras.



June 2013

Commission’s View

2.241 The formula laid out in the Tariff Policy for calculating surcharge is as below:

S = T - [C (1+L/100) + D]

Where:

S is the surcharge

T is the Tariff payable by the relevant category of consumers;

C is the Weighted average cost of power purchase of top 5% at the margin

excluded liquid fuel based generation and renewable power

D is the Wheeling charge

L is the system Losses for the applicable voltage level, expressed as a

Percentage

2.242 The Commission is of the view that the policy does not differentiate between demand

charges or energy charges. For implementing tariff philosophy in letter and spirit, a

reasonable realisation rate from consumer category needs to be considered.

Accordingly, average billing rate for the category shall be used for computing the

cross subsidy surcharge.

2.243 The Commission has revised the power purchase quantum for TANGEDCO for the

second control period as outlined in the Chapter A4. Commission has applied the

merit order principles and arrived at power purchase from top 5% at the margin

excluding liquid fuel based and renewable generating stations for computation of

cross subsidy surcharge.

2.244 The Commission does not agree with the suggestion that CSS computation should

include the transmission charges as well. If one has to describe the formula prescribed

in the Tariff Policy for arriving at Surcharge, it will be as follows

a. The average realisation rate/average billing rate of a consumer category

minus the average cost of power purchase avoided due to consumer

opting for open access grossed up for system losses minus the wheeling

charges accrued to the distribution licensee for grant of open access to the

consumer.

2.245 Based on the explanation above, the distribution licensee will charge the consumer for

wheeling charges and revenue accrues to the account of distribution licensee i.e.

TANGEDCO whereas the transmission charges are charged by and accrued to

Transco i.e. TANTRANSCO. Hence the logic of including transmission charges in

the formula is not acceptable.



June 2013

12. Subsidy


2.246 Last year the subsidy for agriculture and hut is Rs/5858 Crores. The TANGEDCO received only Rs.276 Crores. Govt. should give the full subsidy to the TANGEDCO.

2.247 The subsidy to be given by GoTN is projected as Rs. 1500 crores based on the number of Service Connections, whereas GoTN is giving a subsidy of only Rs 315

crores. Steps should be taken by TNERC to ensure that the right amount of subsidy is

released to TANGEDCO by GoTN.

Commission’s Response

2.248 Subsidy determined by the Commission has been fully given by GoTN.

13. Peak hours and time slots


2.249 Current peak hour in 6 am to 9 am and 6 pm to 9 pm. Commission directed

TANGEDCO to submit load pattern which is not yet submitted. In R&C measure

peak hour is 6 pm to 10 pm, however practically peak hours are from 6 pm to 9 pm.

2.250 Commission to redefine peak hour as 6 pm to 9 pm and remove morning peak hour

Commission’s View

2.251 Sufficient data is not available to assess the impact of the additional hour in Peak

hours, and hence the Commission is continuing with the existing TOD slots. The

TANGEDCO is directed to submit data on ToD consumption along with the next

Tariff Application with proper justification and consideration by the Commission.

Depending on the impact and response to the ToD tariffs, the Commission will take

view on ToD tariffs depending on data availability and viability in the next tariff

order.

2.252 The Commission is of the view that peak hour tariff and night hour rebate need not be

on equal footing. During the Peak hours, marginal cost of power procurement is very

high and being in revenue neutral regulated business, a pass through mechanism has

to be made available to the Utility to recover its cost and also to disincentivise the

avoidable consumption during the peak period. During the night off-peak hours the

Utility would be operating its base load plants to cater to the off peak load, which are

built in to the tariff of the consumer and there is no equitable avoidance of cost for the

Utility vis-à-vis peak hour consumption.



June 2013

14. Solar Purchase Obligation


2.253 Solar purchase obligation for LT Commercial consumers should be abolished. For

others it shall start from the next year since sufficient solar power is not available.

2.254 Already LT commercial consumer is in higher tariff category this solar purchase

obligation for LT Commercial consumers should be abolished.

2.255 Solar purchase obligation of 3% within December shall be stopped.

2.256 TNERC has erred in imposing the SPO for LT (Commercial) consumers at 3% of the

total consumption even though many issued are yet to be finalized.

2.257 TNERC has ignored the fact that on account of R&C measures and unscheduled

power cuts which range from 0 to 14 hours, during which time the consumer will not

be able to draw and utilize power, it would be impossible for the obligated consumers

to meet their obligations.

2.258 TNERC by way of imposing SPO has imposed additional cost indirectly to the

obligated consumers, which is in the nature of an increase in tariff

2.259 Fixation of SPO quantum of 3% upto 31.12.2013 and 6% from 01.01.2014 would not

be appropriate and correct considering the non-availability of equivalent or sufficient

solar installation in the entire state.

2.260 TNERC is requested to provide ‘Net’ Metering facility / guidelines to adjust the

excess generation by Solar PV panels in billing.

Commission’s View

2.261 SPO is not relevant to the Tariff Petition.

15. Renewable Power


2.262 Upgradation should be done. Promote Solar power. Cochin Airport is operating

based on the Solar Power. The big projects like Railways, airports should energize

from the Solar Power.

2.263 Bio energy in Tamil Nadu is estimated as 6,15,800 kW whereas actual is 1,87,265 kW

which constitutes 27%. Bio energy in Tamil Nadu should be utilized effectively like

Maharashtra and Gujarat as Maharashtra uses 74% and Gujarat 62%.

2.264 Solar Power shall be used for street lights and drinking water overhead tanks.



June 2013

Commission’s View

2.265 All suggestion for promoting renewable energy shall be examined separately.

16. Equitable distribution of power


2.266 What are the action taken by the Commission with respect to the directions given by

the Hon’ble High Court of Madras on Equitable distribution of power.

2.267 Representatives from small scale industries, industrial associations, consumer

associations and individual consumers have requested that the tariff should not be

hiked and have all spoken about equitable distribution to be implemented.

Commission’s View

2.268 Separate Petitions have been filed with the Commission and this issue will be dealt

separately.

17. Impact of THANE cyclone


2.269 TANGEDCO has faced “THANE” super cyclone during the last year and lost its assets worth more than Rs.500 Crores. Not even a single word is uttered about the

same in the petition. It is an extra-ordinary circumstance that TANGEDCO has faced,

though managed exceedingly well.

TANGEDCO’s Reply

2.270 The expenditure incurred towards restoring the power supply in the districts of Cuddalore on account of “THANE” cyclone has been taken into account in the

additional capital expenditure. The petition for additional capitalization was filed in

October 2012 before the Hon’ble Commission.

Commission’s View

2.271 The Commission has examined the capital expenditure and capitalisation in general

and has allowed all prudent expenditure on provisional basis subject to further

scrutiny.



June 2013

18. Sales


2.272 TANGEDCO did not furnish the methodology for estimating the energy consumption

for the year 2013-14, excepting a run in between the lines that the demand is growing

at 8 % to 10% in the State. It appears that the figures it has furnished were pulled out

of thin air.

TANGEDCO’s Reply

2.273 TANGEDCO would like to submit that the overall growth in sales considered for the

FY 2013-14 is around 16% which is worked out based on 9% growth rate and around

7% increase in consumption due to additional availability of power. Based on the

above assumption most of the additional power that will be available in FY 2013-14

would go to LT consumers who are covered under load shedding. The domestic

consumers are major group of the consumer mix and hence have resulted into an

increase of 23% as compared to FY 2012-13.

Commission’s View

2.274 TANGEDCO has projected energy consumption, load and number of consumers for

the second control period using the historical trend method by applying the category-

wise Compounded Annual Growth Rate (3 years and 5 years CAGR) appropriately.

2.275 Commission after scrutiny of submissions made by TANGEDCO computed the sales

figures taking into account additional capacities coming online during the second

control period leading to improvement in the power supply position. The sales

estimates have been elaborated in Chapter A4.

2.276 Commission is of the view that in future TANGEDCO should come up with a robust

sales estimation technique that flows from a more scientific load growth study and

considers the impact of various factors such as changes in per capita consumption

pattern, sales mix, industrialization in the state etc.

19. Tariff related Comments

a. Tariff for HT Industries


2.277 Maximum demand charges should be modified from Rs 300 / KVA / month to Rs

2.40 / KVA/ hour i.e. it should be charged only for hours of grid supply. It should

have slab wise rates as in Gujarat. It should also be based on voltage at which power

is supplied i.e. Supply at higher voltages should have lower demand charges.



June 2013

2.278 Commission in its last tariff order fixed tariff for HT consumers at Rs 5.50 / unit as

against TANGEDCO proposal of Rs 5 / unit. Commission should consider reduction

of Rs 0.50/ unit for HT consumers.

2.279 Power factor incentive as prayed before APTEL should be approved and reintroduced by the Commission.

2.280 The tariff applicable during evening peak hours of 120% should be made applicable

for 8 hours instead of 6 hours and similarly the time slot for night consumption should

be reduced by one hour.

2.281 The Commission may restore rebate for maintaining high PF of above 0.90.

2.282 Currently, maximum demand charges for any month will be levied in the KVA

demand actually recorded in that month or 90% of sanctioned demand whichever is

higher. However in case of R&C measures its actual recorded maximum demand or

90% of demand quota, whichever is higher. The Commission may reduce the present

billing to 80% as prevailing in Andhra Pradesh.

2.283 Further for as long as R&C measures are in place, the demand charges be reduced

proportionately based on the hours of supply.

2.284 Service connection for gated community is given under domestic tariff 1A category at

present. Water connection, Cable TV connection etc are given as a single service to

the gated community. Only electricity is extended to individual houses. Therefore,

extension of single point of HT supply to the gated community may be considered.

b. Tariff for HT Commercial


2.285 Indian squash academy is currently being charged at commercial tariff. Request for

50% concession on the rates for the squash academy.

2.286 Treat power consumed for Dormitory facility to employees of mills as Domestic

under LT IC instead of being treated as Commercial

c. Tariff for Agriculture and Hut services


2.287 Creed Krishi Vigyan Kendra, which operates under Indian Council for Agricultural Research (ICAR), provides demonstration to small farmers with and without land in

the model farms developed within the organisation. Hence seek change in tariff from

LT IIB to LTIV



June 2013

2.288 The motor used for drawing water from the well is to be treated under the LT tariff IV

category as the same is to be treated as agriculture related allied activities. Extension

of LT Tariff IV to the Poultry farming which has a poultry population of 25000 nos.

of poultry in one farm.

2.289 Renew the free supply for jaggery production in the agricultural land (as the transportation of sugarcane is not possible) for 5 HP Motor for 40 days which was

previously charged at Rs.60/-.

2.290 For fish farming, free supply at LT IV is extended to some people and for other fish

farm owners the tariff is charged under LT IIIA(1)/IIIB or Tariff V. The disparity

should be removed. LT Tariff IV should be extended to all fish farmers. Request for

tariff change in respect of fish farming from IIIA to IV.

2.291 The name of the consumer who obtains service under LT IIIA(1)/III B or V for fish

farming should be included in the waiting list for LT IV and when the consumer

reaches the seniority from that date onwards he should be charged under LT IV.

2.292 Not to raise tariff for agricultural services due to drought in Kancheepuram.

2.293 The present practice of TANGEDCO for categorizing farmers/ farm holdings in

accordance with the usage of land/ occupation does not take into account the size of

the farm holding or the income. Categorize farm holdings based on income / size of

land so that subsidy is given to the needy farmers. Reasonable user charges are also to

be levied.

2.294 Isha Foundation grows plants and gifts them to children/public. Presently charged at

LT III A (1) in some places and LT V in some places. Request for considering the

activity as agriculture and charged appropriately.

2.295 Provide free service under tariff IV for the Poultry farms which have poultry upto

25,000 nos. Issue clear instructions to TANGEDCO to not levy charges under theft of

energy charges and compensation for the services who use agricultural pumpset for

feeding the poultry.

2.296 Free electricity shall be given to all the poultry farms under Tariff IV category.

2.297 Production of meat should be treated as an agriculture related work and free

electricity should be extended.

2.298 The basis on which the tariff of Rs.1750 / HP was fixed for agricultural services is unknown. Now the tariff is proposed to increased to Rs.2500 / HP. The Government

may give subsidy in view of the coming parliament elections, however if the

Government stops the subsidy in future the farmers will be forced to pay the charges.

Hence, a law may be enacted for providing free power to agriculture consumers in

future.

2.299 Farmers are working to provide food to the people and therefore supply of free

electricity to farmers is the duty of the Government.



June 2013

2.300 Free electricity should continue to the agricultural sector. Meter shall be provided in

the hut services and free supply can be given upto 500 units.

2.301 Free supply should be given to poultry farms below 25000 numbers.

2.302 In Tamil Nadu 24.48 Lakh acres of land was under cultivation. Due to failure of

monsoon, this year severe drought is prevailing in Tamil Nadu. 7 small hydro storage

units, 39,200 lakes,18.60 lakh wells are used for agriculture. Thousands of Crores of

rupees were already lost due to drought. So, there should not be any tariff hike in

agriculture and free electricity should be continued forever.

2.303 The proposed agricultural tariff hike to Rs.2500 per HP per annum may be reduced to

below Rs.2000 per HP.

2.304 The proposed tariff hike for hut services of Rs.120 p.m. may be reduced to Rs.75 p.m.

2.305 Huge increase was made to agricultural and hut services last year. This year also tariff

hike is proposed to agricultural and hut services. Even though subsidy is provided by

the Government, we oppose the tariff hike.

d. Tariff for Streetlight and Water supply


2.306 In Tariff Order of 30.7.10, NTADC (New Tirupur Area Development Corporation

Ltd.) was classified under II A similar to TWAD for both HT & LT categories which

has been discontinued in the latest Tariff Order. Classify HT Tariff for all 9 Nos New

Tiruppur Area Development Corporation Ltd under Tariff IIA on par with TWAD

Board

e. Tariff for Domestic


2.307 Maintain the unit rate as in the lower slabs and charge only the units consumed above

the slab in the higher slab instead of adopting different rates for different groups(0 to

100; 0 to 500; 500 and above) based on their consumption.

2.308 Increase in slab rate for more than 500 units at a flat rate of Rs 5.75/= as against Rs

3.75 causes hardship and hence increase slab from 500 units to 1000 units for subsidy

2.309 Fixed charges for LT CT services have been increased from Rs.60 to

Rs.240/KW/month which is 400% increase. Fixed charges should not be related to

MD and retained at the existing energy charges. Drop the fixed charges for LTCT

services as it has no relevance

2.310 Service oriented institutions should be charged at domestic tariff.



June 2013

2.311 Slab system in the domestic tariff should be revised like the slab system followed in

the income tax.

2.312 Tamilnadu Uraga Thozhil mattrum Kurun thozhil munaivar sangam requested for

elimination of slab system for domestic consumption since most of their members are

dwelling in rented accommodation and paying one fourth of their earning as

electricity charges.

f. Tariff for Tiny Industries


2.313 LT III A may be made applicable for loads upto 20 HP.

2.314 The concessional tariff III A awarded to Jewellery making units should continue.

There should be no increase in tariff.

2.315 Request to increase connected load as 20 HP for LT III A (2) due to industrial growth.

2.316 Tariff for Power Loom increased by 110% while it was increased by 37% for other

categories. Due to power cuts an additional cost of Rs.10,000/- has to be incurred for

operating diesel engines. For power looms operating under payment of wages, tariff

has not been increased. On the same lines for Small Scale Power looms the tariff

revised during last year may be withdrawn.

2.317 Although Govt is paying the subsidy for consumption of 500 units for power looms,

the power looms are forced to pay the fixed charges. Hence, there is no meaning for

giving free electricity.

2.318 Slab system before the last tariff order is to be restored.

2.319 The capacity of the fodder, milking machine and pesticide sprayer varies from 0.5 HP

- 2 HP.

2.320 TANGEDCO is not taking action to change the tariff from Commercial to Tariff

IIIA1 to the horticulture. The Commission shall get the details of the services which

were converted from Commercial to Tariff IIIA1 from the TANGEDCO.

2.321 Extension of waiver of fixed charges under LT III-A(2) upto 500 units bi-monthly.

2.322 The tariff hike made during last year was very high and the tariff should not be

increased for the Small and Tiny industries. Until uninterrupted power supply is

implemented in Tamil Nadu, the tariff should not be increased for the Small and Tiny

industries.

2.323 The Power factor was increased and high power factor is maintained by educating the

workers and by installing the capacitors. Hence, the Power factor incentive should be

given. For power factor between 0.85 - 0.9, 1% rebate and for power factor between

0.95 -1, 2% rebate should be given.



June 2013

2.324 In respect of welding services, the 15 % surcharge should be removed.

2.325 Tariff for fish culture is now charged under IIIA1 category. The same should be

converted in to free supply.

g. Tariff for LT Commercial


2.326 Central Prison at Coimbatore was initially charged under HT and there after their

tariff has been changed to Tariff-V by the then TNEB. Since their usage is not in

commercial nature, AG audit objects their billing which is charged under Tariff-V.

2.327 Fixed charges for commercial consumers should be reduced from Rs.120 to Rs.60.

h. Tariff General


2.328 There should be a reduction in number of tariff categories for HT and LT by

combining certain categories such as HT IA and HT IB can be combined, Tariff IIA,

IIB (2) and IIC may be merged, LT Tariff IIA, IIB, IV can be combined, because the

quantum of energy consumed by some of these consumers is not large enough to

merit a separate category.

2.329 Tariff proposed for 2013-14 is not as per Electricity Act, directives of ATE etc. ATE’s directive on Regulatory Assets is not complied.

2.330 Commission should not fix tariff higher than what is asked for by TANGEDCO as

done last year. The rate asked for TANGEDCO should also be reversed as

TANGEDCO has made no improvements despite a 37% increase.

2.331 The tariff proposal for fixation of tariff for the financial year 2013-14 is not showing any indication that the legal and policy guidelines are followed. Some of the

assumptions made in calculating tariff of generating stations are not in accordance

with the basic accounting principles.

2.332 The tariff revision sought in this petition is a measly figure, not worth the petition and

leads to the situation of future hikes in the form of Regulatory Asset.

2.333 TNEB Pensioners Association suggested that TANGEDCO may file a tariff petition

for FY 2013-14 to 15-16 envisaging tariff plan to recover ARR from consumers /

GoTN with suitable higher subsidy, to avoid tariff shock to economically weaker

sections.

2.334 Reduce tariff for low income groups and take assessment every month instead of bi-

monthly.



June 2013

2.335 Provide government subsidy for senior citizens, students of Class X, XII and college

students.

2.336 Adjust the interest on Security Deposit in the CC bill in the year end.

2.337 Consumers to be permitted to pay their CC charges for additional 10 days after the

due date with BPSC after which they can be treated as defaulters.

2.338 Cost of electricity to be differentiated between rural and city consumers.

2.339 Due to inequitable supply of power, tariff for consumers other than Chennai should be

reduced by 20% from the existing levels.

2.340 Free electricity should be provided for Training Centre run by differently abled people, since they are running their centre for their daily livelihood.

2.341 Fixed Charges per KW should be equal for all type of consumers irrespective whether

they are industrial or commercial consumers.

2.342 Since the tariff is equal throughout the state power cut should also be equal in all the districts. Otherwise the tariff shall be reduced for the places where power cut is more.

2.343 TNERC shall not bench mark the tariff of other states while determining the industrial

and commercial tariffs in Tamil Nadu. These consumers cannot take on any further

burden.

2.344 Higher tariff shall be fixed to the lavish elimination to discourage it.

2.345 Calculate power consumption of commercial malls, cinema halls separately and fix

High cost slab system.

2.346 Big commercial organizations consume power heavily for the use of air conditioners

and decorative lights inside the buildings. Therefore the definition of the lavish

elimination should be modified to accommodate these types of consumers also.

2.347 As per the order of APTEL in Appeal No 257 of 2012, request the Commission to

reconsider and re-determine the differential tariff of electricity for peak and off-peak

hours.

2.348 Commission should device steps to recover the Regulatory Asset by way of increasing

the tariff step by step

2.349 Tariff may be hiked for the I.T industries, cinema hall and marriage hall, and for

Lavish Illumination but not for agricultural category.



June 2013

i. Request for Separate Category


2.350 Seeking separate classification for Textile industry as LF for textile industry is 95-98%. Also referred to Clause 2.1.46 of Issue 6 Cost of Supply where it is stated that

tariff may be fixed as per consumer load factor, power factor, voltage, total

consumption and reflect cost of supply.

2.351 Consider Chennai Metro Rail Limited under special category. MOU between GoI,

GoTN, and CMRL dt 15.2.2011 states that electric power is to be made available to

CMRL on a no-profit –no-loss basis, subject to approval of TNERC. Hence tariff

made applicable to CMRL to be on actual cost of supply at 110 kV level excluding

subsidy and cross-subsidy in line with National Tariff Policy and on par with the

tariffs for DMRC and BMRCL.

2.352 For Cold storage plants and food processing plants, Medium and Small scale

industries special tariff may be announced. Power Factor incentive should be

implemented for this category.

TANGEDCO’s Reply

Tariff Categorization

2.353 TANGEDCO would like to inform that as per Section 62 of the Electricity Act, 2003,

State Commission is vested with the powers to determine tariff for various categories

of consumers. The tariff is being fixed after taking into consideration of the

consumer’s load factor, power factor, voltage, total consumption of electricity etc,.

2.354 In the tariff petition for the year 2013-14, tariff revision has been proposed only for agriculture and hut services and there is no proposal to revise the tariff for other

categories of consumers.

Tariff Proposal

2.355 In the tariff petition for the year 2013-14, tariff revision has been proposed for agriculture and hut services and there is no proposal to revise the tariff for other

categories of consumers. Taking into consideration, the power crises in the State, the

TANGEDCO has filed the petition to revise the tariff only for the LT Agricultural and

LT Hut consumers.

2.356 The Hon’ble TNERC has been vested with the powers to revise the tariff to other category of consumers either to increase or reduce without affecting the revenue of

the TANGEDCO to meet out its ARR. The tariff hike to HT consumers for 2012-13

was already upheld by the APTEL in appeal No.257 of 2012.



June 2013

Proportionate reduction in demand charges

2.357 Further also, in appeal No: 257 of 2012 filed by the M/s. Southern India Mills

Association, Coimbatore, against the Tariff Order No.1 of 2012 dated:30.03.2012

issued by the Hon’ble TNERC,the Hon’ble Appellate Tribunal for Electricity vide in

its order dated 09.04.2013 has upheld the levy of demand charges as stipulated in

Tariff Order No. 1 of 2012 dated 30.03.2012.

2.358 The Hon’ble TNERC vide its rulings has held that the demand charges are intended to

cover the fixed cost of TANGEDCO including interest, depreciation, employee cost,

repair and maintenance etc., and hence even if there is no power supply the demand

charges would be levied.

Separate Category for Textile Industry

2.359 If a separate tariff for textile industries is considered, then other industries coming

under industrial category may also request for a similar treatment and there will be no

tariff rationalization.

2.360 Further also, in appeal No:257 of 2012 filed by the M/s. Southern India Mills

Association, Coimbatore, against the Tariff Order No.1 of 2012 dated:30.0.03.2012

issued by the Hon’ble TNERC, the Hon’ble Appellate Tribunal for Electricity in its

order dated 09.04.2013 has upheld the non consideration of separate tariff for Textile

Industry.

Consideration of Dormitory facility as Domestic:

2.361 The Hon’ble TNERC in its Tariff Order dated 30.03.2012 has clearly stated that in case of supply under HT Tariff, except for HT Tariff III supply used for creating

facilities for the compliance of Acts/Laws or for the purpose incidental to the main

purpose of the establishment of the consumer such as facilities extended to the

employees/students/patients as the case may be within the premises of the consumer

shall be considered to be for the bonafide purpose. However, if such facilities are

extended to the public, such facilities shall be metered by the licensee separately and

charged under appropriate LT Tariff.

2.362 It has also been stated in the Tariff Order dated 30.03.2012 that in the case of supply under HT Tariff IA,IIA,IIB and HT Tariff III at the option of the consumer, the use

of electricity for the residential quarters within the premises shall be metered

separately by the licensee and charged under LT Tariff I C.

2.363 Hence, it is clear that in case of supply under I A, II A, II B and III the use of electricity for residential quarters within the premises can be charged under LT Tariff

I C at the option of the consumer.



June 2013

2.364 In case if the consumer does not wish to exercise any option under clause 10.1.1

under chapter 10 of the tariff Order dated 30.03.2012,then the supply of power can be

treated to be for the purpose of the establishment of the consumer such as facilities

extended to the employees/students/patients as the case may be within the premises of

the consumer and shall be considered to be for the bonafide purpose and charged

under HT Tariff I A without LT metering.

Commission’s View

2.365 Tariff categorization is dealt with in detail in the tariff schedule.

2.366 Request for a law to be enacted for providing free power to agriculture consumers will

be conveyed to GoTN.

Separate Category

2.367 In case the distribution licensee or a consumer feels the justification and necessity for

the creation of a new category, then it should submit the necessary data on consumer

and consumption pattern for the category and also ensure that the categorisation is in

accordance with the criteria for differentiation provided under Section 62(3) of the EA

2003, for the Commission's consideration.

Demand Charges

2.368 The demand charges are towards recovery of fixed charges of the distribution licensee

towards the cost of infrastructure provided to meet the maximum demand recorded by

a consumer and are not related to the hours of actual supply to the consumer. In any

case as highlighted by the consumer himself the State Commission has ordered to

collect the demand charges in relation to the quota demand instead of sanctioned

demand during the period the Restriction and Control measures are in force, which

means the consumer is not paying any excess demand charges if he restricts his

maximum demand to demand quota. The same is upheld by Hon’ble ATE in its order

on the same matter on 09.04.2013. Relevant para of the order is extracted below

10.7 Imposition of Demand charges is perfectly legal. The Demand charges are

imposed on the basis of maximum demand actually recorded or 90% of the demand

quota during the period of restriction and control. We do not find any illegality in the

impugned order in this regard.”

2.369 The Commission after carrying out a thorough review of the ARR and tariff filings

made by the utility to arrive at allowable pass through cost, based on which the tariff

applicable to each category is determined to enable recovery of the computed cost.

The determination of tariff is an exercise that factors in aspects such as prudence of

expenditure, efficiencies, cost of supply, cross subsidies etc., and put through

iterations to ensure the interests of the consumers are protected at the same time

allowing cost recoveries to happen in a reasonable manner.



June 2013

Power Factor Incentive

2.370 Power Factor (PF) disincentive and incentive should not be equated with each other. The Commission notes that PF disincentive mainly caters to passing the additional

cost of the grid imbalance settlement to the consumer. Whereas, maintaining high

power factor itself is an incentive to the consumer as it leads to stable voltage,

reduction of strain to consumer equipments and reduction of current consumption

charges to the consumer.

2.371 The Commission would like to state that power factor incentive is subjudice in

Supreme Court.

20. Consumer issues and Quality of Supply


2.372 Restoration of supply to Agriculture pumpsets in case of breakdown taken a long

time.

2.373 Low voltage problem exists and no quality supply is being given even during the

period where supply is available. On giving proper supply, if tariff is increased people

will be ready to pay now

2.374 As there is meter shortage, consumers purchase the meters to get new service

connections. However, the amount for cost of meters is not refunded to the

consumers. Government shall take action to manufacture the meters.

2.375 There are large numbers of applications pending before TANGEDCO for providing

agricultural service connections. The pending petitions should be disposed of on

timely basis.

2.376 Due to way leave problem agriculture service connection has not been effected even

after 7 years. Request the Commission to interfere to effect service connection to the

consumer.

2.377 R.A. No.4 of 2011 permitted refund of Power Factor incentive for 85 days frm

1.8.2010 to 25.10.2010, TANGEDCO is yet to refund the amount. Request specific

order for compliance.

2.378 Failure of distribution transformers and burning of motors are reported. To avoid this

3 phase supply should be given to agricultural consumers.

2.379 Conditions laid down by TANGEDCO for agricultural service connections are not acceptable.

2.380 Since there are no adequate employees at lower cadre, TANGEDCO’s staff is unable

to attend faults. Further, as the power is supplied at free of cost, the staff do not care

to attend the faults. The attitude of the staff of TANGEDCO should change and they

should attend the faults immediately and rectify the same.



June 2013

2.381 Shortage of employees is stated as the reason for delay in attending the faults. This

can be overcome by appointing contract labours.

2.382 Old distribution lines have to be replaced and maintenance should be done in the

distribution network.

2.383 Delay in giving agricultural connections should be avoided.

Commission’s View

2.384 The concern expressed by various consumers with regard to the quality of supply is

very relevant. The Commission has already notified the Standards of Performance

Regulations, which stipulate the quality of supply levels to be maintained by the

Utility. While overall standards may be maintained by the Utility, it is quite possible

that some chronic problems may exist in the system. TANGEDCO should take

adequate efforts to attend to these problems.

• The common problems expressed by the consumers include low voltage,

overloading and burning of transformers, cable failures, load shedding etc.

• While load shedding is directly related to the availability of power and the ability

of TANGEDCO to purchase power at high cost, the other issues are technical in

nature and will need investment in improving last mile connectivity.

• The distribution planning to be done by the TANGEDCO, duly taking into

account the requirements of Supply Code, Distribution Code etc. would go a long

way in improving the quality of supply.

• The Commission believes that TANGEDCO has its own in-house guidelines with

regard to operation and maintenance of distribution system. Adequate

transformation ratio will have to be created depending on the requirement.

• HT/LT ratio needs to be improved.

• The distribution transformers are to be metered to get the profile of the voltage,

down time as well as the energy. Normally load on transformers should be limited

to the extent of 80% of the rated capacity to prevent failures.

• The voltage at the tail end needs to be monitored at regular intervals. Proactive

action on the part of TANGEDCO will go a long way in reducing the consumers’

complaints and improving their satisfaction.

• Erection procedure and safety requirements as per section 53 of Electricity Act,

2003 should be followed in letter and spirit.



June 2013

2.385 As far as consumers are concerned, these complaints could be taken up with the

Utility directly and in the absence of corrective action by TANGEDCO, the issue

could be taken up with the Consumer Grievance Redressal Forum (CGRF) for

Redressal of grievances.

2.386 In case the consumer is not satisfied with the Order of CGRF, an appeal could be

preferred to the Ombudsman. The Regulations relating to CGRF and Ombudsman

could be referred from the website of the Commission

21. Objections/Suggestions by Southern Railways

2.387 Railway Traction should be exempt from Tax on electricity based on Article 287 of

the Constitution of India. Article 287 also embodies the fact that the tariff should be

reasonable and lower than tariffs charged to other bulk consumers.

2.388 Based on provisions of Section 62(3) of EAct 2003, the Commission may set different

tariffs according to purpose of supply. Railways are a public utility, have no profit

motive and are an essential part of the transport infrastructure of the Country.

Considering the purpose of supply the Traction category should not be burdened with

high level of cross subsidy.

2.389 Average cost / unit paid by Railways is higher than the Industries owing to the fact that while Load Factor at individual points is low due to the nature of Traction.

Considering the above in previous Tariff Orders, Commission fixed demand charges

lesser than the HT Industrial consumers, however energy charges are fixed on par

with other HT industries availing power at 11 KV without considering the fact that

voltage level for Traction is at 110 KV where transmission losses are lower.

2.390 Tariffs should reflect the cost to serve in line with Section 61 of Electricity Act 2003 and TNERC Terms and Conditions of Tariff Regulations 2005.

2.391 Category wise cost of service study carried out shows unrealistic apportionment of

costs for Railway Traction which is not based on facts.

2.392 It is submitted that coincident peak demand should be considered for allocation of

demand costs instead of non coincident peak demand. Southern Railway had

requested all SEs of TANGEDCO for load survey data downloaded during monthly

meter reading for computing coincident and non-coincident peak demands for

submitting the same to the Commission, but data from all circles is not received.

2.393 Commission should direct TANGEDCO to rework Cost to serve Railway Traction

based on coincident peak demand.

2.394 As Railways avails power supply at 110 kV directly from the 110 kV Grid of

TANTRANSCO, the demand related cost allocation should be based on Simultaneous

maximum demand as such demand related distribution costs should be zero for

Railway Traction.



June 2013

2.395 Since Railway Traction is a separate category, technical losses corresponding to the supply voltage of 110 kV should be 2.7% whereas losses upto 11 KV of 6.96% is

considered.

2.396 Commercial losses allocated to Railways is flawed, it should be zero since it is

connected to exclusive 110 KV feeders.

2.397 There are errors as far as energy consumption of Railway Traction is shown in the

petition.

2.398 Assumptions on allocation of customer related costs in the study report on Cost to

serve model in the petition is wrong and misleading. The report states that servicing

bulk consumers is costlier than retail consumers, the fact is the other way round and

hence the study needs a relook.

2.399 TANGEDCO’s proposal of imposing 15% surcharge for harmonics dumping lacks

clarity and is very high. Applicability of IEEE 519/1992 at user end in isolation for

imposing surcharge is questionable. Hence, Commission may defer implementing

surcharge for harmonics dumping until there is clarity in reckoning harmonics is

achieved.

2.400 TANGEDCO’s proposal for adopting 0.85 PF for LT consumers and 0.90 for HT

consumers is irrational. Minimum power factor stipulated for LT consumers should

atleast be equal to HT & EHT consumers.

2.401 Present low PF surcharge works out to 636.98 paise/kVARh whereas cost of reactive power due to the utility is only 10.5 paise/ kVARh. This anomaly is due to adoption

of lag + lead logic for computation of billing power factor. Imprudent implementation

of lag + lead logic of metering by TANGEDCO causes more inefficiency in the

system.

2.402 Also impact on system stability due to leading reactive power as contended by

TANGEDCO is exaggerated. While fixed capacitors gets incentives in Kerala and

Maharashtra, it is penalized in Tamil Nadu.

2.403 AP Discoms which are adopting kVAh billing also ignore leading PF for computing

kVAh consumption.

2.404 Leading PF in Railway Traction should be treated as unity PF.

2.405 Cushion of 20% over and above the Contracted Maximum Demand be allowed

without any surcharge for meeting exigencies. APERC granted such relaxation as per

their Order of 10-03-2011. Consider allowing Recorded Maximum Demand upto

120% of CMD without any penalty for occasional exceeding above CMD.

2.406 Commission to incorporate the agreed conditions between Railways and

TANGEDCO in the Terms and Conditions for Railway Traction to avoid confusion in

some circles in the matter of billing of recorded demand during feed extensions.



June 2013

2.407 Recorded MD during feed extensions due to power failures attributable to

TANGEDCO/ TANTRANSCO can be ignored for billing purposes. Similarly

Recorded MD during failures of equipment or other reasons that are beyond the

control of Railways is allowed without any surcharge upto the sum of CMDs at the

failed and feed extending traction substations. APERC had allowed the same in their

Order dated 10-03-2011.

2.408 Grant suitable rebate on Demand and energy charges for a period of at least 5 years

from the date of commissioning for the new Traction subs stations. Other States are

giving similar benefits to encourage Railways. .

2.409 Commission to direct TANGEDCO to re-programme the existing energy meters to

record the export of energy as well and billed on net metering principles as adopted

for NCES sources. This is in view of Railways introducing a new generation 3 phase

electric locomotives type WAP7 and WAG9 which works on unity power factor for

all loads and has regenerative braking facility. Therefore, 14-18% of energy is

regenerated and fed back into the grid when there are no sufficient trains in the

section.

TANGEDCO’s Replies

Cost to serve Railway Traction at 110 kV

2.410 Taking into consideration the views and objections, the Hon’ble TNERC in its Tariff Orders dated: 31.07.2010 and 30.03.2012 have fixed the demand charges for Railway

traction as Rs.250/KVA i.e. less by Rs.50/KVA compared to HT Industrial

consumers. However, the energy Charges were fixed on par with the HT Industries.

TANGEDCO has not proposed any changes in all categories of HT consumers in the

tariff petition filed before the Hon’ble TNERC for determining tariff for the FY 2013-

14.

2.411 The Hon’ble commission is the competent authority to fix the tariff taking into

account the revenue requirement of TANGEDCO.

Surcharge for excess over CMD for traction

2.412 In any month if the recorded demand exceeds the contracted (sanctioned) demand, the

Tamil Nadu Electricity Supply Code permits the licensee to levy surcharge on the

excess over contracted maximum demand charges. Accordingly, the TANGEDCO

levies the surcharge for excess over contracted maximum demand.

2.413 The request of the Southern Railways not to levy any penalty for occasional exceeding above to the Contracted Maximum Demand is not related to the tariff order

and can be considered only by way of an amendment to the Tamil Nadu Electricity

Supply Code. Hence, the Southern Railways are requested to approach the TNERC

for making necessary amendment to the TNERC Supply Code.



June 2013

Recorded Maximum Demand during feed extension:

2.414 The Consumer has to meet out their demand requirement within their sanctioned

demand. To maintain their recorded demand within the sanctioned demand they have

to create / develop adequate infrastructure within their premises / usage areas.

2.415 The Regulations of the Commission do not have any provision to provide rebate for

the development of infrastructure in the consumer area.

Levy of low power factor surcharge:

2.416 The Commission has ordered to maintain the power factor at the minimum level of

0.9 to the HT consumers and 0.85 to LT consumers. The request of the Southern

Railways to waive the levy of penalty to leading power factor has not been considered

by the commission and the same has also been upheld by the Hon’ble APTEL.

2.417 Hence, the request of the Southern Railways to consider the leading power factor as unity power factor is settled one.

Harmonic surcharge:

2.418 TANGEDCO submits that the harmonic surcharge was made applicable vide tariff

order dated 30th March 2012 and is within the purview of the Hon’ble Commission.

The detailed report on measurement of harmonics and methodology to be adopted for

the same are enclosed.

Metering to regeneration units

2.419 The generators are entitled to inject energy into the grid. Presently there is no provision in the Commission’s Regulations / orders which permits the consumer to

inject the energy into the grid as requested by the Southern Railways.

Commission’s View

2.420 Tax exemption for Railways is prerogative of the state Government.



June 2013

2.421 Regarding the low power factor surcharge, it is stated that the railways filed a petition MP. No. 5 of 2006 with the Commission for restoration of old system of computation

of power factor. The Commission did not accept the plea of the railways in its Order

dated 2-4-2007 and directed the railways to introduce the dynamic compensation

system within a period of three years. Two years later Railways filed another petition

MP No. 3 of 2009 pleading to permit them to adopt “Lag only” logic for metering and

to use only static capacitor compensation for their traction sub-stations. This petition

was dismissed by the Commission in its Order dated 29-6-2009. Against this Order,

the railways filed a review petition RP No. 2 of 2009. The review petition was

disposed of by a reasoned order on merits by the Commission in its Order dated 1-4-

2010. The Railways preferred an appeal against Commission’s Order on RP No. 2 of

2009 dated 1-4-2010. But the APTEL dismissed the Appeal No. 122 of 2010 by its

Order dated 4-11-2011. Raising of the same issue by the Railways again has no

meaning and serves no purpose.

2.422 The Railways have requested the Commission to defer charging of harmonics

surcharge since there is no standard procedure available for measurement of

harmonics. The harmonics norms have been fixed by the CEA in its Regulations

notified on 21-02-2007. The Regulation specifies that the norms shall be

implemented and complied with not later than 5 years from the date of publication of

the regulation. Accordingly, the Commission only implemented the provision in its

Order T.P. No. 1 of 2012. The measurement of harmonics has already been done

jointly by Salem Steel Plant and TANGEDCO as per the norms of the CEA and this

has been recognized by the Commission in its order on MP No. 22 of 2011 dated 28-

9-2012.

2.423 The Commission approved demand charges of Rs.250/- per kVA in its earlier tariff

order against Rs.300/- per kVA approved for other consumers considering the special

nature of the traction load. The Commission is of the view that the Railways, request

to permit 120% of the contracted demand is not supported by reasons and is not in

line with the Regulations.

2.424 Regarding the net metering facilities requested for accounting of power exported from

re-generative breaking, Southern Railways may approach the distribution licensee to

study the proposal for implementation. The TANGEDCO and the railways are

directed to assist each other and resolve the issue and this issue may be brought before

the Commission.

2.425 Regarding charging of tariff on the basis of voltage wise cost to serve it is stated that the issue has been dealt with in detail separately in this order.



June 2013

A3: FINAL TRUE-UP FOR FY 2010-11, PROVISIONAL TRUE-UP FOR

FY 2011-12 AND ANNUAL PERFORMANCE REVIEW FOR FY

2012-13

3.1 TANGEDCO, in its Petition has, sought for Final Truing up of expenditure and

revenue for FY 2010-11 and Provisional Truing up for FY 2011-12 based on the

actual expenditure and revenue as per the Audited Accounts and Provisional Accounts

respectively. It has also sought for the Annual Performance Review for the year FY

2012-13 based on information furnished by it. In this Section, the Commission has

analysed all the elements of revenue and expenses for FY 2010-11, FY 2011-12 and

FY 2012-13, and has undertaken the Truing up of expenses and revenue after due

prudence check.

3.2 This chapter summarizes the highlights of the petitions filed by Tamil Nadu

Generation and Distribution Company Limited (TANGEDCO) for final true-up of

FY11, Provisional true-up of FY12 and Annual Performance Review for FY13.

Energy Sales – FY11 and FY12

3.3 Tamil Nadu Generation and Distribution Company Limited (TANGEDCO), in its

Petition submitted the actual energy sales to various consumer categories during FY

2010-11, FY 2011-12 and FY 2012-13. In this Section, the Commission has analysed

the sales and distribution loss trajectory from FY 2010-11 to FY 2012-13. On the

basis of approved Distribution Loss, the Commission has approved the energy

balance.

3.4 The Commission in its previous Tariff Order had approved the category-wise energy

sales after deducting the wheeled units and then considering the past trends in the

growth of category-wise sales. TANGEDCO in its current Petition has furnished

actual sales quantum for FY 2010-11 based on Audited accounts, for FY2011-12

based on Provisional accounts and for FY2012-13 based on actuals till February. The

category-wise energy sales (excluding wheeling units) as approved by the

Commission last year vis-à-vis the sales quantum filed by TANGEDCO this year for

FY 2010-11 and FY 2011-12 are tabulated below.

Table 1: Comparison of category-wise sales approved in the last Tariff Order and actual as filed in this

Petition (MUs)

Particulars

2010-11 2011-12

Approved

in the last

order

Actual

5 months

Actual

Approved

in the last

order

Actual

HT Consumer Category

I-A HT Industries 12,210 11,949 4,422 10,657 9,581

I-B Railway Traction 485 373 248 654 708

II-A Govt. Educational Inst. etc. 903 1,113 482 882 1,251

II-B Pvt. Educational Inst. etc. 148 87 53 222 227

II-C Places of Public Worship 3 36 10 5 28



June 2013

Particulars

2010-11 2011-12

Approved

in the last

order

Actual

5 months

Actual

Approved

in the last

order

Actual

III HT Commercial 1,763 1,821 789 1,651 1,856

IV Lift Irrigation 7 17 11 6 6

V Supply to Puducherry and Other States 0 412 174 0 400

Sub Total HT 15,520 15,808 6,187 14,078 14,057

LT Consumer Category

I-A Domestic 16,309 16,249 6,251 17,428 17,507

I-B Huts 355 355 148 462 395

I-C LT bulk supply 10 15 5 11 21

II-A Public Lighting and Water Supply 1,603 1,609 672 1,614 1,700

II-B-1 Govt. Educational Inst. etc. 84 501 202 127 574

II-B-2 Pvt. Educational Inst. etc. 150 9 8 254 247

IIC Places of Public Worship 99 98 42 102 101

IIIA 1 Cottage and Tiny Industries 123 677 261 123 562

IIIA 2 Power Looms 824 822 324 730 782

IIIB L.T. Industries 4,435 4,062 1,601 4,015 3,953

IV L.T. Agriculture 9,619 9,410 4,008 10,418 10,118

V L.T. Commercial 4,598 4,344 1,732 4,514 4,296

VI Temporary supply 17 20 10 20 25

Sub Total LT 38,226 38,173 15,263 39,819 40,281

Total HT + LT 53,746 53,981 21,451 53,897 54,338

3.5 TANGEDCO submitted that during the 5 months period starting 1st November 2010

to March 31st 2011, the actual sales were 21,451 MUs including 174 MUs sold to

Puducherry.

3.6 The Commission after scrutiny of the audited accounts has approved the sales for FY

2010-11 and FY 2011-12 based on factors as noted below:

• Sale to Metered categories: The Commission accepts the actual sales as per

the audited accounts adjusted for wheeled units for all relevant metered

categories of consumers. This is in light of the R&C imposed on HT Industries

and Load shedding imposed on various other categories of consumers. Further

re-categorisation of a single category namely Recognised Educational

Institutions was split into Government Educational Institutions and Private

Educational Institutions was done in the tariff order dated 31.07.2010.

• Sales to Un-metered categories: From the sales figures submitted, it is

observed that for Agriculture, the consumption as estimated by TANGEDCO

is lower than that approved by the Commission in the last order. The



June 2013

Commission decided to accept the sales as per audited accounts for all un-

metered categories.

• The Commission maintains its stance on disallowance of sale to Puducherry.

Based on its ruling in its previous Tariff Order dated July 31, 2010. The

Commission has accepted the actual sales for the 5 month period of FY 2010-

11 as 21,451 MUs less 174 MUs (sale to Puducherry) totalling to 21,277 MUs.

Impact of Wheeling units and Cost – FY 2010-11 and FY 2011-12

3.7 The Commission in its last tariff order had identified that the wheeled units were not

to be included in sales and power purchase for FY 2010-11 and FY 2011-12, and

based on data made available by TANGEDCO, calculated the wheeling units to be

adjusted from three consumer categories namely; HT Industrial, HT Commercial and

HT Private Educational institutions.

3.8 TANGEDCO in its current petition has rectified this error and provided the following

data for adjustment of wheeled units both in sales as well as in revenue. Therefore the

total sales and corresponding revenue approved by the Commission for of FY 2010-

11(last 5 months) and FY 2011-12 is as follows. The revenue is exclusive of subsidy.

Table 2: Total sales and revenue as approved by the Commission for FY 2010-11 (5months) and FY 2011-

12

Particulars FY 2010-11 FY 2011-12

MU's Rs. Crores MU's Rs. Crores

Total Sales as per Accounts 24,159 8,104 61,387 20,003

Wheeling for HT Industries 2,618 831 6,750 2,268

Wheeling for Private Educational Institutions 4 2 10 5

Wheeling for HT Commercial 87 61 289 203

Less: Total Wheeling Adjustments 2,709 894 7,049 2,476

Total Sales without wheeling units 21,451 7,211 54,338 17,527

Less: Total Sales to Puducherry 174 51 400 123

Total Sales as approved 21,277 7,160 53,938 17,404

3.9 The following table shows the category-wise sales for the last five months of FY

2010-11 and for FY 2011-12 as approved by the Commission.



June 2013

Table 3: Category wise Sales for FY 2010-11(5 months) and FY 2011-12 as approved by the Commission

(MUs)

Consumer Category

FY 2010-11 FY 2011-12

Sales Sales

High Tension Supply (HT)

I-A HT Industries 4,422 9,581

I-B Railway Traction 248 708

II-A Govt. Educational Inst. Hospitals, water supply etc. 482 1251

II-B Pvt. Educational Inst., Cinema theatres & Studios 53 227

II-C Actual places of public worship, Mutts and Religious Inst. 10 28

III HT Commercial 789 1856

IV Lift Irrigation, Co-operative societies 11 6

Sub Total HT 6,013 13,657

Low Tension Supply (LT)

I-A Domestic Purposes 6,251 17,507

I-B Huts in Village Panchayats, TAHDCO etc. 148 395

I-C Defence Colonies etc. Notified Tariff 5 21

II-A Public Lighting and Public Water Supply & Sewerage 672 1,700

II-B-1 Govt. Educational Inst., Hospitals, water supply etc. 202 574

II-B-2 Private Educational Inst., Cinema theatres & Studios 8 247

IIC Actual places of public worship 42 101

IIIA 1 Cottage and Tiny Industries, 261 562

IIIA 2 Power Looms 324 782

IIIB Coffee grinding and Ice factories etc. and Industries not

covered under LT Tariff IIIA 1,601 3,953

IV Agriculture and Govt. seed farms 4,008 10,118

V Commercial and all categories of Consumers not covered under

IA, IB,IC, IIA, IIB, IIIA, III B and IV 1,732 4,296

VI Temporary supply: (a) Lighting and combined installation, (b)

Lavish illuminations 10 25

Sub Total LT 15,263 40,281

Total HT and LT 21,277 53,938

3.10 TANGEDCO in its Petition has included sale of power to Puducherry. The issue of

supply of power to the Union Territory of Puducherry was discussed in the Tariff

Order dated 31st July 2010. This issue was discussed in para 3.2.6 of the Order. This

entire paragraph is extracted below.

“3.2.6 Supply to Puducherry

3.2.6.1 The Tariff petition filed by TNEB includes sale of power to the Union

Territory of Puducherry and the projection for various years are as follows:



June 2013

(a) 2007-08 393 MU

(b) 2008-09 373 MU

(c) 2009-10 420 MU

(d) 2010-11 445 MU

(e) 2011-12 471 MU

(f) 2012-13 499 MU

3.2.6.2 The Commission desired to know the basis on which power is being

supplied to Puducherry and sought details regarding agreement if any entered into

between the two States. The TNEB has not been able to produce any agreement for

sale of power to Puducherry. In this backdrop the Commission had examined the

tariff orders issued by the Commission in 2003.

3.2.6.3 The position taken by Government of Puducherry during the earlier

tariff determination exercise was that the tariff for supply of energy to Puducherry

should be as per the Tamil Nadu Revision of Tariff Rates on Supply of Electrical

Energy Act, 1978 and the supply shall be charged at the rates supplied by NLC to the

TNEB plus wheeling charge at 10 Paise per KWh plus 4% on the energy wheeling

towards transmission loss. The State of Puducherry also disputed the jurisdiction of

the TNERC to decide the tariff for Puducherry. The TNEB had expressed a view that

the agreement between TNEB and NLC is a bilateral agreement and the Government

of Puducherry is not a party to this agreement. Since the cost of supply at the HT end

worked out to 303.69 paise, they proposed to continue charging Puducherry @

Rs.3.00 per kWh under HT Tariff V. The Commission maintained status quo and

continued the then prevailing tariff of Rs.3 per kWh.

3.2.6.4 Since the Joint Electricity Regulatory Commission for the State of Goa

and Union Territory of Puducherry had issued an order on ARR and Retail tariff for

the electricity department, Government of Puducherry for the financial year 2009-10

on 5-2-2010 the Commission had examined that order too and the relevant portion

with reference to sale of power by TNEB to Puducherry is extracted below:

“In respect of purchase of power from TNEB the EDP has submitted that initially the

power availed from TNEB was charged at the rate paid by TNEB to NLC plus

wheeling charges. The TNEB has revised the tariff to Rs.3.00per kwh with effect from

01/12/2001 treating EDP as a HT consumer. The EDP has challenged this decision

by filing a petition before Hon’ble TNERC. The Hon’ble TNERC concluded that the

sale of power between EDP and TNEB was in the nature of interstate sale of power

and EDP cannot be treated as a HT consumer and ordered to maintain status quo.

The EDP has challenged this in the Hon’ble High Court of Judicature at Madras and

stay was granted and the Hon’ High Court directed payment to TNEB at the rate

charged by NLC plus wheeling charges. The EDP made the payment accordingly. The

main issue is yet to be decided.”



June 2013

3.2.6.5 The Commission would like to observe that in the absence of firm sale

contract between TNEB and the Government of Puducherry and with the ever

increasing sale of electricity to Puducherry by the TNEB, a situation is being created

which has resulted in the TNEB subsidizing the electricity consumers of Puducherry

at the expense of electricity consumers of Tamil Nadu. Currently, the TNEB itself is

facing an acute shortage of power and has been purchasing power in the open market

in the range of Rs. 5 to 7 per unit. Whereas the sale to Puducherry is at the rate of

Rs.1.94 per unit. TNEB needs to protect the electricity consumers of Tamil Nadu.”

3.11 The Commission understands that a case is pending before the Hon’ble High Court of

Madras and the TANGEDCO is supplying power to Puducherry at the rate of Rs.3.28

per unit (Rs.3.18 NLC TS-1 rate fixed by CERC and 10 paise for wheeling charges).

Under these circumstances, the Commission has no other choice but to consider the

transaction with Puducherry as outside the purview of this Tariff Order. For doing

this, the Commission will consider the total energy sales to Puducherry grossed by the

transmission loss for reduction in the total power purchase. Further, corresponding to

the energy actually supplied to Puducherry at the Tamil Nadu interface point, revenue

will not be taken into account for the purpose of Annual Revenue Requirement. The

Commission hopes that this issue will be settled at the earliest, once the Order of the

Hon’ble High Court of Madras in this issue becomes available.

3.12 Hence, Commission has not considered the sale of power to Puducherry. In addition,

Commission has not considered wheeled units in sales estimate. The Commission has

approved sales quantum of 21,277 MUs for FY 2010-11 (5months) and 53,938 MUs

for FY 2011-12.

Energy Sales – FY 2012-13

3.13 TANGEDCO in its petition projected sales for 2012-13 based on actual sales for 6

months upto September 2012. Responding to data gaps, TANGEDCO furnished

actual sales for the year till February 2013. The table below captures the sales as

approved by the Commission in the last Tariff order, sales as filed by TANGEDCO in

its petition and the actual sales furnished by TANGEDCO in its reply to data gaps.

Table 4: Comparison of category-wise sales approved in the last Tariff Order, as filed in their Petition

and actual submitted for FY 2012-13 (MUs)

Particulars

2012-13

Approved in

the last order Petition

Revised

filing


I-A HT Industries 13,545 7,944 7,111

I-B Railway Traction 726 758 709

II-A Govt. Educational Inst. etc. 882 1,038 903

II-B Pvt. Educational Inst. etc. 243 256 224

II-C Places of Public Worship 5 6 -

III HT Commercial 1,908 1,837 1,312



June 2013

Particulars

2012-13

Approved in

the last order Petition

Revised

filing

IV Lift Irrigation 6 6 4

V Supply to Puducherry and Other States 413 408

VI Temporary supply - 5 165

Total HT 17,315 12,263 10,835


I-A Domestic 18,252 18,934 17,540

I-B Huts 617 473 425

I-C LT bulk supply 11 12 10

II-A Public Lighting and Water Supply 1,625 1,905 1,652

II-B-1 Govt. Educational Inst. etc. 127 139 109

II-B-2 Pvt. Educational Inst. etc. 254 276 192

IIC Places of Public Worship 102 113 93

IIIA 1 Cottage and Tiny Industries 126 143 134

IIIA 2 Power Looms 730 831 713

IIIB L.T. Industries 4,015 4,913 4,280

IV L.T. Agriculture 10,601 9,707 11,089

V L.T. Commercial 5,066 5,421 4,841

VI Temporary supply 20 24 36

Total LT 41,546 42,891 41,114

Total HT + LT 58,861 55,155 51,948

3.14 The steep decrease in actual consumption in FY 2012-13 over what was approved by

the Commission last year can be attributed to the severe energy shortage in the state

which led to imposing of additional R&C measures and Load shedding. This in turn

has further led to consumers procuring energy through open access.

3.15 The percentage change in category-wise actual sales as of FY 2012-13 over that of FY

2011-12 is as follows:

Table 5: Growth rate of sales in FY 2012-13 over the actual sales of FY 2011-12

Particulars 2011-12

MUs

2012-13

MUs % growth


I-A HT Industries 9,581 7,111 -26%

I-B Railway Traction 708 709 0%

II-A Govt. Educational Inst. etc. 1,251 903 -28%

II-B Pvt. Educational Inst. etc. 227 224 -1%

II-C Places of Public Worship 28 -



June 2013

Particulars 2011-12

MUs

2012-13

MUs % growth

III HT Commercial 1,856 1,312 -29%

IV Lift Irrigation 6 4 -33%

V Supply to Puducherry and Other States - 408 -

VI Temporary supply - 165 -

Total HT 13,657 10,835 -24%


I-A Domestic 17,507 17,540 0%

I-B Huts 395 426 8%

I-C LT bulk supply 21 10 -52%

II-A Public Lighting and Water Supply 1,700 1,652 -3%

II-B-1 Govt. Educational Inst. etc.* 574 109 -81%

II-B-2 Pvt. Educational Inst. etc. 247 192 -22%

IIC Places of Public Worship 101 93 -8%

IIIA 1 Cottage and Tiny Industries* 562 134 -76%

IIIA 2 Power Looms 782 713 -9%

IIIB L.T. Industries 3,953 4,280 8%

IV L.T. Agriculture 10,118 11,089 10%

V L.T. Commercial 4,296 4,841 13%

VI Temporary supply 25 36 44%

Total LT 40,281 41,114 2%

*The sales needs to be verified with the audited account for FY 2012-13

3.16 Metered categories: The Commission has accepted the actual sales for all metered

categories for FY 2012-13 as submitted by TANGEDCO in its reply to data gaps. As

treated in the previous years, sales to Puducherry have not been allowed by the

Commission for the year FY 2012-13 as well.

3.17 Un-metered categories: TANGEDCO furnished the following information regarding

sales to Hut and Agricultural consumption.

• Hut category (LT I-B): In its reply to the data gaps identified by the

Commission, TANGEDCO submitted the revised details towards Hut

consumption for FY 2012-13. The Commission observed that TANGEDCO

has furnished its calculation of 426 MU, towards hut consumption on the basis

of certain assumptions which are not in conformity with the Government

Order (G.O.).Ms. No.2 dated 03-06-2011 issued by GoTN.

Therefore the Commission recalculated consumption based on the details in

the above mentioned G.O. The Commission has considered the wattage as

specified by the GoTN and the hours of use as considered by TANGEDCO.

Data furnished by TANGEDCO on the number of huts to which specific



June 2013

electrical appliances were distributed, has been considered by the Commission

to arrive at consumption. The total quantum of huts was kept equal to that of

FY 2011-12 in the wake of a decreasing trend in number of hut connections

from FY 2010-11 onwards.

Table 6: Hut consumption as re-estimated by the Commission for FY 2012-13

Sl. No. Appliance type Numbers Wattage Hours Days Consumption

(MUs)

1 Light 1,367,171 40.00 6.00 365.00 119.76

2 TV 859,690 70.00 10.00 365.00 219.65

3 CF Lamp 89,044 11.00 6.00 365.00 2.15

4 Mixie 267,741 550.00 0.50 365.00 26.87

5 Grinder 267,817 300.00 2.00 156.00 25.07

6 Fan 256,390 61.00 12.00 365.00 68.50

7 RGGVY Huts 373 40.00 12.00 365.00 0.07

Total Consumption 462

• Agricultural category (LT IV): In its reply to data gaps identified by the

Commission, TANGEDCO submitted the revised details of Agricultural

consumption for FY 2012-13. The Commission observed that there was a

significant downward revision in the number of agricultural service

connections submitted in comparison to data in Form F-2 (Sales) of the

petition. The revised agricultural load in HP at the end of the year had only

increased marginally. However TANGEDCO increased its estimate of

agricultural consumption by 1,382 MUs, i.e. from 9,707 MUs to 11,089 MUs.

The Commission re-estimated the agricultural consumption based on the

average capacity of pumpset in the middle of the year as calculated below. The

data on actual additional connections given as well as corresponding increase

in load as submitted by TANGEDCO in its reply to data gaps has been

considered. It has been assumed by the Commission that 50% of the

connections and corresponding capacity would get added in the first half of the

year. The average consumption in kWh/ HP has been capped at the level as it

stood for FY 2011-12 based on the 5% sample study data submitted last year

at 923 units. Based on the above assumptions the agricultural consumption for

the year FY 2012-13 has been estimated as 10,206 MUs by the Commission.

Based on the average consumption per HP/ Annum as per the 5% sample data

for FY 2012-13, TANGEDCO has estimated the annual consumption as

11,089 MUs. The Commission has calculated the average hours of daily

supply to agricultural consumers based on this data. It was noticed that the

average hours of daily supply for FY 2012-13 worked out to be higher than

that of FY 2011-12. The Commission opines that this situation is improbable

given the facts that the year 2012-13 saw higher shortage of power as

compared to the previous year as well as that 2012-13 was a drought year.

Given that additional connection to the tune of 15,539 were given in the State

during the year, it is evident that the 5% sample data for FY 2012-13 cannot



June 2013

be considered for estimating annual consumption. Hence the Commission did

not take into consideration the 5% sample study data submitted for FY 2012-

13.

Table 7: Agricultural consumption as re-estimated by the Commission for FY 2012-13

Sl. No. Particulars 2012-13

1 No. of service connections at the end of the year 2,036,898

2 YoY Increase 15,539

% added in the first half 50.0%

3 No. of service connections in the middle of the year 2,029,129

4 Connected load in HP at the end of the year 11,084,004

5 YoY Increase 54,545

6 Connected load in HP at the middle of the year 11,056,732

7 Average capacity of pumpset in HP at the middle of the year ( 6 / 3 ) 5.45

8 Average consumption in KWh /HP / Annum 923

9 Consumption in MUs ( 3 x 7 x 8 ) 10,206

3.18 The following table shows the category-wise sales approved by the Commission for

FY 2012-13 based on revised sales estimates.

Table 8: Sales for FY 2012-13 approved by the Commission (MUs)

Particulars Sales


I-A HT Industries 7,111

I-B Railway Traction 709

II-A Govt. Educational Inst. etc. 903

II-B Pvt. Educational Inst. etc. 224

III HT Commercial 1,312

IV Lift Irrigation 4

V Temporary supply 165

Total HT 10,427


I-A Domestic 17,540

I-B Huts 462

I-C LT bulk supply 10

II-A Public Lighting and Water Supply 1,652

II-B-1 Govt. Educational Inst. etc. 109

II-B-2 Pvt. Educational Inst. etc. 192

IIC Places of Public Worship 93

IIIA 1 Cottage and Tiny Industries 134



June 2013

Particulars Sales

IIIA 2 Power Looms 713

IIIB L.T. Industries 4,280

IV L.T. Agriculture 10,206

V L.T. Commercial 4,841

VI Temporary supply 36

Total LT 40,268

Total HT + LT 50,695

3.19 Therefore the sales for FY 2012-13 as approved by the Commission are 50,695 MUs

as against 51,948 MUs filed by TANGEDCO.

Energy Availability

3.20 TANGEDCO meets its energy requirements from its own generating stations,

purchases from central generating stations, IPPs and other sources.

3.21 TANGEDCO in its Petition submitted the details of energy availability from FY

2010-11 to FY 2012-13 based on the actual energy available during the period. The

submission for FY 2010-11 is based on audited accounts while the submission for FY

2011-12 is based on provisional accounts. For FY 2012-13, TANGEDCO

extrapolated the availability on the basis of actual energy available for first half of the

financial year.

3.22 Accordingly Commission in this Section has analyzed the performance of

TANGEDCO’s own generating stations. In addition for the period FY 2010-11 to FY

2012-13, the energy availability from Own Generating stations as well as from other

sources is discussed. The availability of energy is discussed source wise in the

following order:

1 Own Generation

• Thermal Generation

• Hydro Generation

• Wind Generation

• New generating stations

2 Other Sources

• Central Generating Stations

• IPPs

• Captive/Cogeneration and Non-Conventional energy sources

• Other sources such as Trading – Bilateral & Exchange, NTPC NVVN and UI



June 2013

Own Generation

3.23 The total installed capacity of generating stations of TANGEDCO as on March 2013

was 5792 MW. The detailed break up of generation capacity of TANGEDCO stations

is as tabulated below:

Table 9: Installed capacity of existing TANGEDCO stations (As on March 2013)

Name of the power plant Installed capacity (in MW)

Coal based generating stations

Ennore Thermal Power Station (ETPS) 450

Tuticorin Thermal Power Station (TTPS) 1050

Mettur Thermal Power Station (MTPS) 840

North Chennai Thermal Power Station (NCTPS) 630

Sub total 2970

Gas based generating stations

Tirumakottai Gas based Power Station (TGTPS) 108

Kuttalam Gas based Power Station (KGTPS) 101

Valuthur - Unit 1 Gas based power station (VGTPS – 1) 95

Valuthur - Unit 2 Gas based power station (VGTPS – 2) 92

Basin Bridge Gas turbine power station (BBGTPS) 120

Sub total 516

Hydro Generating Circles

Kundah Hydro Generating Circle 833

Kadamparai Hydro Generating Circle 595

Erode Hydro Generating Circle 504

Tirunelveli Hydro Generating Circle 356

Sub Total 2289

Wind Energy - Tirunelveli and Udumalpet 17

Total 5792

Thermal generation

3.24 The operational performance parameters such as plant load factor and auxiliary

consumption approved by the Commission in the last tariff order and claimed by

TANGEDCO in its current MYT petition are tabulated below.

Table 10: Plant load factor of own generating stations

Name of the

power plant

Approved in last tariff order (March 30,

2012)

Submitted by TANGEDCO in MYT

Petition

2010-11 2011-12 2012-13 2010-11 2011-12 2012-13

ETPS 35.42% 25.81% 20.28% 35.40% 22.65% 23.43%

TTPS 77.33% 84.87% 82.43% 77.30% 85.57% 83.20%

MTPS 82.42% 92.40% 89.01% 82.42% 92.77% 83.85%

NCTPS 81.74% 87.54% 86.95% 81.74% 84.81% 86.27%

TGTPS 68.74% 64.55% 68.75% 68.74% 74.47% 75.85%



June 2013

Name of the

power plant


2012)


Petition

2010-11 2011-12 2012-13 2010-11 2011-12 2012-13

KGTPS 19.29% 72.45% 71.20% 19.51% 46.58% 12.80%

BBGTPS 4.93% 5.71% 5.75% 4.93% 2.81% 0.51%

VGTPS - 1 67.54% 67.29% 78.50% 67.59% 78.94% 49.12%

VGTPS – 2 0% 55.22% 78.30% - 56.16% 53.84%

Table 11: Auxiliary consumption of own generating stations

Name of the

power plant


2012)


Petition

2010-11 2011-12 2012-13 2010-11 2011-12 2012-13

ETPS 15.78% 16.32% 15.00% 15.78% 16.70% 15.00%

TTPS 8.31% 10.11% 8.50% 8.28% 7.98% 8.50%

MTPS 8.51% 8.31% 9.00% 8.30% 8.26% 8.34%

NCTPS 8.89% 4.35% 8.50% 8.70% 8.36% 8.40%

TGTPS 6.19% 6.00% 6.00% 6.87% 6.50% 5.97%

KGTPS 6.83% 6.67% 6.00% 7.28% 7.32% 6.00%

BBGTPS 0.62% 0.30% 3.43% 0.65% 0.57% 0.99%

VGTPS - 1 5.52% 5.87% 6.00% 5.90% 7.00% 5.91%

VGTPS – 2 - 5.84% 6.00% - 7.00% 6.40%

3.25 TANGEDCO in its petition submitted the actual PLF and Auxiliary consumption for

FY 2011 and FY 2012. For FY 2013 TANGEDCO submitted estimates based on first

half year performance.

3.26 The Commission observed that the actual PLFs submitted for all coal based power

stations except for ETPS are above 80% and in accordance with the Commission’s

approved figures in the last order. However, it was observed that for the gas based

stations the PLFs were lower than the approved norms.

3.27 TANGEDCO in its Petition submitted the following reasons for low PLF of its power

plants

KGTPS

i. KGTPS was under shut down from 18th July 2010 to 26th May 2011 due to

removal of Gas Turbine Generator stator for replacement of failed stator at

VGTPS-I/Ramnad. This decision was taken in order to avoid Minimum

Guaranteed Off-Take charges (MGO) payable at Valuthur for non-utilization

of gas at Ramnad Zone.

ii. The unit was again shut down from 22nd February 2012 to February 2013 due

to failure of compressor blades in gas turbine rotor. Also, the unit was not able

to be re-commissioned as per envisaged schedule due to diversion of materials

procured /refurbished for re-commissioning of KGTPS to VGTPS-I in order to

avoid minimum guarantee offtake charges payable at VGTPS-1.



June 2013

NCTPS

i. Unit I, The unit was taken off Bars on 21st January 2012 due to Hydrogen gas

leakage in the Generator Stator water system. After completion of the works,

the Unit was put back into service on 19th March 2012.

ii. Unit II, The unit was hand tripped on 20th February 2012 for Emergency Shut

down due to Turbine Axial shift high on Positive side. After completion of the

works, the Unit was put back into service on 03rd March 2012.

MTPS

The lower PLF of MTPS in FY 2012-13 was mainly due to the major fire accident

that occurred in the coal handling system at MTPS on 10th May 2012 resulting in

forced outage of all the four Units. After reconstruction works of the damaged Coal

handling system the system was put back into service within 15 days and full

generation was resumed at MTPS by the end of May’12.

VGTPS -1

i. The unit was under shutdown from 11th March 2012 to 02nd May 2012, due

to vibration in GT rotor

ii. The unit tripped again on 26th June 2012 but could not be put back into

service due to heavy internal damages in GT rotor. The unit was re-

commissioned on 17th October 2012 by diverting the materials procured for

re-commissioning of KGTPS.

VGTPS -2

i. The unit, which was under shut down from 9th January 2010 to 7

th May 2011

due to high vibrations and heavy internal damages, was under stabilization till

the end of July 2011 due to teething problems such as Gear Box vibration

leakage in Blow off Valve HP Economizer Valve etc. Even after attending

these problems by OEM, full load could not be reached due to Choking of Air

Filters. The defective Air Filters were replaced by new filters on 15th April

2012.

ii. The plant was under shut down from 27th April 2012 to 04th May 2012 for

Boiler License renewal.

iii. The unit again tripped on 30th June 2012 due to activation of surge protection

relay which was activated due to sudden dip in frequency. Subsequently,

Steam Turbine Generator got tripped. After normalization, the GT could not

be started due to failure of bearing in Inlet Guide Vane (IGV). This unit was re

commissioned on 14th August 2012 by importing IGV and put into service.



June 2013

3.28 However, Commission has observed that net generation submitted by TANGEDCO is

not in accordance with the PLFs and auxiliary consumption submitted for FY 2010-11

and FY 2011-12.

3.29 The net generation submitted by TANGEDCO from FY 2010-11 to FY 2012-13 is as

given below:

Table 12: Net own generation submitted by TANGEDCO (in MUs)

Name of the

power plant


2012)


Petition

2010-11 2011-12 2012-13 2010-11 2011-12 2012-13

ETPS 490 851 680 505 744 785

TTPS 2718 7018 6938 2648 7262 7002

MTPS 2312 6234 5960 2402 6279 5655

NCTPS 1713 4621 4391 1868 4301 4361

TGTPS 254 650 611 271 660 674

KGTPS 65 457 592 0 383 106

BBGTPS 22 44 58 39 29 5

VGTPS 221 1093 1207 302 1027 792

Total 7795 20968 20437 8035 20686 19381

3.30 Commission asked TANGEDCO to clarify the anomalies in energy availability

calculations. In response, TANGEDCO has revised the PLFs in accordance to the

gross generation and also submitted net generation details.

3.31 The revised PLFs submitted by TANGEDCO and auxiliary consumption calculated

by the Commission based on the revised data submitted by TANGEDCO are

tabulated below:

Table 13: Revised PLFs and auxiliary consumption for thermal plants submitted by TANGEDCO

Name of the

power plant

Revised PLFs Auxiliary Consumption

2010-11 2011-12 2010-11 2011-12

ETPS 36.76% 22.61% 18.74% 20.05%

TTPS 75.88% 85.57% 9.03% 8.67%

MTPS 86.06% 92.77% 9.05% 9.00%

NCTPS 89.61% 84.81% 9.53% 9.12%

TGTPS 74.45% 74.48% 7.38% 6.94%

KGTPS 0.00% 46.58% 0.00% 7.90%

BBGTPS 8.98% 2.81% 0.65% 1.96%

VGTPS - 1 93.08% 78.93% 6.27% 7.53%

VGTPS – 2 0.00% 56.10% 0.00% 7.53%

Note: Infirm power already included in the existing thermal stations

3.32 Also in response to additional data required, TANGEDCO has submitted the actual

generation in FY 2012-13 (upto February 2013) with respect to own generating

stations.



June 2013

Table 14: Actual generation in FY 2012-13 (Upto February 2013) – Submitted by TANGEDCO

Name of the power plant Actual generation (Upto

February 2013) – in MUs

ETPS 555.10

TTPS 6904.76

MTPS 5139.54

NCTPS 4248.93

TGTPS 627.79

KGTPS 7.283

BBGTPS 0.41

VGTPS – 1 361.34

VGTPS – 2 407.31

Total 18252.46

3.33 From the submissions made, it is observed that Plant Load Factor for almost all the

plants was in accordance with the Commission approved norms without any major

deviation except for KGTPS, MTPS (in FY 2013) and VGTPS (in FY 2013). The

auxiliary consumption achieved by most of TANGEDCO generating plants is in line

with auxiliary consumption numbers approved by the Commission in its Tariff Order

dated 30th March 2012.

3.34 In view of the reasons cited for lower PLFs by TANGEDCO and the fact that FY

2010-11 and FY 2011-12 are already over, the Commission decided to accept the

PLFs and Auxiliary consumption numbers as submitted by TANGEDCO in its

petition, for computation of energy availability. For FY 2012-13, the Commission

projected net generation from thermal stations by considering the actual generation

details (Upto February 2013) submitted by TANGEDCO. However variable charges

will be calculated considering approved auxiliary consumption as per last tariff

order and allocation of capacity charges will be done in accordance with

regulation-37 of TNERC tariff regulations, 2005.

3.35 The summary of energy availability submitted by TANGEDCO and approved by the

Commission in this order for existing TANGEDCO thermal stations is tabulated

below:

Table 15: Summary of energy availability – TANGEDCO thermal stations (MUs)

Name of

the power

plant

FY 2010-11 FY 2011-12 FY 2012-13

Last TO Petition Commissi

on Last TO Petition

Commis

sion Last TO Petition

Commissi

on

ETPS 490 505 505 851 744 744 680 785 610

TTPS 2718 2648 2648 7018 7262 7262 6938 7002 7620

MTPS 2312 2402 2402 6234 6279 6279 5960 5655 5684

NCTPS 1713 1868 1868 4621 4301 4301 4391 4361 4634

TGTPS 254 271 271 650 660 660 611 674 682

KGTPS 65 0 0 457 383 383 592 106 51

BBGTPS 22 39 39 44 29 29 58 5 0.41

VGTPS 221 302 302 1093 1027 1027 1207 792 879

Total 7795 8035 8035 20968 20685 20685 20437 19381 20160



June 2013

Hydro Generation Circles

3.36 In the last order Commission has approved the hydro generation excluding the

generation from Kadamparai PSHES. Also, Commission has considered the net

energy available on account of Kadamparai PSHES in FY 2010-11 and FY 2011-12.

3.37 TANGEDCO as well in line with Commission’s order has filed the actual generation

in FY 2010-11 (From November 2010) and FY 2011-12 without considering the

generation from Kadamparai PSHES. For projecting the hydro generation for FY

2012-13, TANGEDCO has assumed a PLF of 25%.

3.38 The hydro generation approved by the Commission and filed by TANGEDCO is

tabulated below.

Table 16:Comparison between hydro generation approved in last order with TANGEDCO filing – in

MUs

Name of the

power plant FY 2010-11 FY 2011-12 FY 2012-13

Last TO Petition Last TO Petition Last TO Petition

Net Hydel Gen. on

account of hydro

plants excluding

Kadamparai

1881 2175 4701 4823 5242 3544

3.39 The PLFs and auxiliary consumption provided by TANGEDCO were not in line with

the net generation submitted for FY 2010-11 to FY 2012-13. In response to data gaps

TANGEDCO has revised the PLFs and auxiliary consumption for its hydro

generating circles corresponding to net generation.

Table 17: Revised PLFs and auxiliary consumption for hydro generation circles submitted by

TANGEDCO

Name of the

power plant

Revised PLFs Auxiliary Consumption

2010-11 2011-12 2010-11 2011-12

Erode 31.01% 35.74% 0.53% 0.55%

Kundah 33.69% 33.70% 0.53% 0.50%

Tirunelveli 29.22% 31.31% 0.53% 0.48%

3.40 In reply to additional information asked for, TANGEDCO submitted that the actual

generation excluding Kadamparai PSHES in FY 2012-13 was 2576 MUs. It can be

observed that the hydro generation in FY 2012-13 was significantly lower than

Commission approved generation of 5242 MUs. TANGEDCO submitted that this

significant reduction in hydro generation is due to less rainfalls resulting into drought

in FY 2012-13.

3.41 Based on the submissions made and the approach adopted in the last tariff order,

Commission is accepting the submission of TANGEDCO for the purpose of energy

availability.



June 2013

Table 18: Summary of energy availability – Hydro generation circles – in MUs

Name of the power plant FY 2010-11 FY 2011-12 FY 2012-13

Last

TO

Petitio

n

Commiss

ion

Last

TO

Petitio

n

Commiss

ion

Last

TO

Petitio

n

Commiss

ion

Net Hydel Gen. on account

of hydro plants excluding

Kadamparai

1881 2175 2175 4701 4823 4823 5242 3544 2576

3.42 For Kadamparai PSHES, in the last tariff order Commission has approved the

additional energy required. Accordingly, TANGEDCO has filed the additional energy

required for Kadamparai PSHES based on actual energy requirement for FY 2010-11

and FY 2011-12.

Table 19: Kadamparai Generation and power consumption – in MUs

Particulars FY 2010-11 (From Nov

2010)

FY 2011-12 FY 2012-13

Last TO Petition Last TO Petition Last TO Petition

Kadamparai - Gen 237 290 489 506 533

Kadamparai – Pump mode 255 332 508 534 561

Net Energy Required 18 42 19 28 31 28

3.43 TANGEDCO has filed the additional energy required for Kadamparai PSHES based

on actual energy requirement for FY 2010-11 and FY 2011-12 and projected the

energy requirement for FY 2012-13 based on Commission’s methodology. In

response to additional information sought for, TANGEDCO has provided the actual

energy requirement for Kadamparai PSHES for FY 2012-13. Based on the submission

Commission is accepting the additional energy requirement for Kadamparai PSHES.

Table 20: Kadamparai Generation and power consumption – in MUs

Particulars FY 2010-11 (From Nov

2010)

FY 2011-12 FY 2012-13

Petition Commission Petition Commission Petition Commission

Additional energy

required for Kadamparai

PSHES 42 42 28 28 28 26

Wind Generation

3.44 The Commission in Previous Tariff Order approved net generation of 13 MU for FY

2010-11 and 11 MU in FY 2011-12 and in FY 2012-13 corresponding to 17.55 MW

installed capacity of wind mills owned by TNEB.

3.45 TANGEDCO in its Petition submitted that it has an installed capacity of 17.55 MW

and the net available energy from Wind Mills from FY 2010-11 to FY 2012-13 as

submitted by TANGEDCO is tabulated below:



June 2013

Table 21: Net Energy available from wind in MUs - TANGEDCO Submission

Particulars FY 2010-11 FY 2011-12 FY 2012-13

Wind Generation 1 12 28

3.46 Commission has considered the actual wind energy generation for FY 2010-11 and

FY 2011-12 as submitted by TANGEDCO.

3.47 For FY 2012-13, in response to additional information required, TANGEDCO has

provided the details of energy generation from its own wind mills and the same has

been considered by the Commission.

Table 22: Energy available from wind mills in FY 2010-11 – November to March (MUs)

Particulars Last order Petition Commission


Table 23: Energy available from wind mills in FY 2011-12 (MUs)



Table 24: Energy available from wind mills in FY 2012-13 (MUs)



New Generating Stations

3.48 In the last tariff order, for new upcoming units, i.e., NCTPS (Stage-II, Unit-1 and 2)

and MTPS (Stage-III), the Commission considered PLF as 80% during FY 2012-13 in

accordance with Clause-37 of TNERC Tariff Regulations, 2005. In addition

Commission has approved the auxiliary consumption of 8.50% for NCTPS stage –II

and 9.00% for MTPS stage III.

3.49 Commission has approved generation from new thermal stations considering CoD of

31st March 2012 for MTPS Stage III, 15

th June 2012 for NCTPS Stage-II (unit 2) and

15th October 2012 for NCTPS stage-II (unit 1).

3.50 However, these units did not achieve commissioning as envisaged in the last tariff

order. TANGEDCO in its Petition has submitted revised CoD for these stations as 1st

March 2013 for MTPS Stage III, 1st April 2013 for NCTPS Stage-II (unit 2) and 1

st

May 2013 for NCTPS stage-II (unit 1).

3.51 TANGEDCO has stated the following reasons for delay in commission of these new

stations



June 2013

MTPS – Stage III (Unit-1)

i. Commissioning was delayed due to delay in coal handling, ash handling,

milling system and bunkers erection, etc. The contract has been extended up to

31st March 2013 in order to facilitate the commissioning.

ii. The unit was synchronized with oil on 4th May 2012 and achieved a full load

capacity of 608 MW on 11th October 2012. The initial operation of the unit

was under progress from 23rd November 2012 to 04th December 2012.

However the unit was under forced shut down from 04th December 2012 to

attend to few technical problems that were encountered during the period of

initial operation.

NCTPS – Stage II (Unit-1 & 2)

i. Commissioning was delayed due to delay in Coal Handling System, Cooling

water system, Ash handling system etc.

3.52 Though TANGEDCO has submitted a revised CoD of MTPS stage III to be 1st March

2013 in its petition and projected 236 MUs, the unit did not achieve commissioning.

Accordingly Commission has not considered any energy availability from these new

generating stations in FY 2012-13:

Table 25: Energy availability on firm basis in FY 2012-13 from new thermal stations - in MUs

Name of the Power Station Last order Petition Commission

MTPS – Stage III 3428 236 0

NCTPS – Stage II (Unit-1) 1760 0 0

NCTPS – Stage II (Unit-2) 3030 0 0

Note: Infirm power already included in the existing thermal stations

Power Purchase from other sources

3.53 TANGEDCO in its Petition has included power purchase quantum from the following

sources:

i. Central Generating Stations (CGS)

ii. Independent Power Producers (IPPs)

iii. Captive/Cogeneration and Non-Conventional energy sources

iv. Other sources such as Trading – Bilateral & Exchange, NTPC-NVVN and UI

3.54 In the last tariff order Commission has estimated the energy availability for FY 2010-

11 and FY 2011-12 based on the actual energy availability data submitted by

TANGEDCO upto December 2011. For the new additions of CGS the Commission

estimated the energy availability based on the CoD dates submitted by TANGEDCO.



June 2013

3.55 Similarly in case of IPPs, captive and non conventional energy sources, Commission

adopted the following approach for estimation of energy availability

i. Commission allowed the actual power purchase from IPPs in FY 2010-11 and FY

2011-12 while in FY 2012-13 Commission has allowed the power purchase from

IPPs based on merit order dispatch

ii. For estimating the energy availability from captive and non conventional energy

sources, Commission has not considered wheeling units and has considered only

the energy directly purchased from Wind, CPP, Cogeneration and Biomass plants.

3.56 TANGEDCO in its current Petition has submitted the energy availability for FY

2010-11 and FY 2011-12 based on actual energy purchased and in accordance with

the approach adopted by the Commission in its last order. For FY 2012-13,

TANGEDCO has projected the energy availability based on energy availability during

the first half of FY 2012-13.

Table 26: Energy availability from other sources as submitted by TANGEDCO – in MUs

Name of the Power Station FY 2010-11 FY 2011-12 FY 2012-13

Central Generating Stations 8528 20630 22755

IPPs 2923 5731 5633

Captive and Non conventional

energy sources 498 10040 8347

Trading, UI and NTPC-NVVN 5643 7618 10510

Total 17592 44018 47245

3.57 On preliminary scrutiny of the actual power purchase data from Captive sources,

NCES and Trading, it was observed that the wheeling units adjustment was not done

properly in FY 2011-12. The wheeling units on account of captive consumers and

wind consumers have been accounted in purchase from trading. In response to data

gaps, TANGEDCO submitted the revised power purchase from these sources after

correctly accounting for wheeling units based on audited accounts.

Table 27: Revised submission of TANGEDCO after adjusting wheeling units (FY 2011-12) - in MUs

Source Initial

Submission

Revised

Submission

Captive 2778 557

Wind 5893 5711

Trading (Bilateral) 5174 7395

3.58 Commission is accepting the submission of energy availability of TANGEDCO for

FY 2010-11 and FY 2011-12 based on the fact that submission for FY 2010-11 is

based on energy purchase and for FY 2011-12 the numbers were revised as per the

approach adopted by Commission in its last order.

3.59 In response to additional information required, TANGEDCO has submitted the

provisional estimate of actual purchase from these sources in FY 2012-13.



June 2013

Table 28: Provisional estimate of actual power purchase in 2012-13 by TANGEDCO - in MUs

Name of the Power Station FY 2012-13

Central Generating Stations 21567

IPPs 5971

Captive and Non conventional

energy sources 9195

Other sources 7051

Total 43785

3.60 For FY 2012-13, Commission approves the energy availability based on provisional

estimate of actual power purchase data submitted by TANGEDCO. The summary of

power purchase from other sources approved by the Commission is tabulated below:

Table 29: Summary of approved energy availability from other sources – in MUs

Name of the Power Station Last Order Petition Commission

FY 2010-11


IPPs 2894 2923 2923

Captive and Non conventional energy

sources 2851 498 498

Other sources 4992 5644 5644

Total 19150 17593 17593

FY 2011-12


IPPs 5982 5731 5731


sources 6965 10040 7637


Total 43972 44018 43836

FY 2012-13


IPPs 7020 5633 5971


sources 7259 8347 9195


Total 42715 47245 43785

Total energy available from all sources

3.61 Based upon the above discussion in respect of individual sources, the total energy

available from all sources as submitted in the Petition and as approved in the Order is

tabulated below:



June 2013

Table 30: Summary of energy available from all sources in FY 2010-11 (From November 2010) - in MUs

Source Last Tariff Order Petition Commission

Own Generating Stations

Coal Based Power Plants

Ennore Thermal Power Station 490 505 505

Tuticorin Thermal Power Station 2718 2648 2648

Mettur Thermal Power Station 2312 2402 2402

North Chennai Thermal Power Station 1713 1868 1868

Sub Total 7232 7424 7424

Gas Based Power Plants

Tirumokottai Kovilkalappal Gas Power Plant 254 271 271

Kuttalum Gas Power Plant 65 0 0

Vallathur Gas Power Plant 221 302 302

Basin Bridge Gas Power Plant 22 39 39

Sub Total 563 611 611

Hydro Generation Circles*

Erode Hydro Generation Circle

1881 2175 2175 Kundah Hydro Generation Circle

Tirunelveli Hydro Generation Circle

Kadamparai Hydro generation circle

Wind Mills 5 1 1

Sub Total - Existing Stations 9681 10211 10211

New Stations

North Chennai TPS Stage - II 0

Mettur Stage - III 0

Ennore Expansion 0

Sub Total 0 0 0

Total - Own Generation 9681 10211 10211

Central Generation Stations

NTPC SR (I&II) 1683 1658 1658

NTPC SR III 427 449 449

NLC TS - I 1278 1213 1213

NLC TS - II 1268 1244 1244

NLC TS I Expansion 629 631 631

NTPC Talcher 1527 1542 1542

NTPC Simhadri 0 0 0

MAPS 583 591 591

KAIGA 358 454 454

NTPC Kayakulum 356 343 343

NTPC ER 306 402 402

NTPC Dadri 0

NTPC Vallur 0

Kudankulum



June 2013


NLC TS - II Expansion 0

NLC - Tuticorin 0

Sub Total 8413 8528 8528

IPPs

GMR 365 393 393

Samalpatti 158 179 179

PPN 1040 1072 1072

Madurai 147 168 168

ST-CMS 689 606 606

ABAN 342 357 357

Penna 154 148 148

Sub Total 2894 2923 2923

CPP and Renewable Energy Sources

Captive 192 218 218

Wind ** 2193 -148 -148

Biomass 46 38 38

Cogeneration 415 388 388

Solar 1 2 2

Sub Total 2851 498 498

Other Sources

Trading - Bilateral & Exchange 4392 4703 4703

UI 600 759 759

NTPC NVVN

182 182

Sub Total 4992 5644 5644

Total - Other Power Purchase 19150 17593 17593

Grand Total 28832 27804 27804

*Net Hydro generation is shown without considering power generated from

Kadamparai PSHES

**Actual wind generation shown is net of wheeling unit adjustment. Negative

indicates that wheeling units drawn are more than the actual wind generation from

November 2010 to March 2011.

Table 31: Summary of energy available from all sources in FY 2011-12 (in MUs)










June 2013


Sub Total 18724 18587 18587






Sub Total 2244 2099 2099



4701 4823 4823 Kundah Hydro Generation Circle



Wind Mills 11 12 12


New Stations

North Chennai TPS Stage - II

Mettur Stage - III

Ennore Expansion

Sub Total 0 0 0



NTPC SR (I&II) 4139 4106 4106

NTPC SR III 1105 1048 1048

NLC TS - I 3066 3146 3146

NLC TS - II 3242 3167 3167



NTPC Simhadri 328 468 468

MAPS 1499 1604 1604

KAIGA 1107 1171 1171


NTPC ER 885 465 465

NTPC Dadri 0 101 101

NTPC Vallur

Kudankulum

NLC TS - II Expansion

NLC - Tuticorin

Sub Total 20875 20630 20630

IPPs

GMR 962 858 858


PPN 1483 1491 1491



June 2013


Madurai 333 282 282

ST-CMS 1711 1688 1688

ABAN 776 760 760

Penna 366 360 360

Sub Total 5982 5731 5731


Captive 575 2778 557

Wind 5130 5893 5711

Biomass 115 73 73


Solar 10 11 11

Sub Total 6965 10040 7637

Other Sources

Trading - Bilateral & Exchange 9400 6206 8427

UI 750 718 718

NTPC NVVN 0 694 694

Sub Total 10150 7618 9838


Grand Total 69661 69540 69357


Kadamparai PSHES

Table 32: Summary of energy available from all sources in FY 2012-13 (in MUs)








Sub Total 17969 17804 18547






Sub Total 2468 1577 1613


Erode Hydro Generation Circle 5242 3544 2576

Kundah Hydro Generation Circle



June 2013




Wind Mills 11 28 13


New Stations

North Chennai TPS Stage - II 4790

Mettur Stage - III 3428 236 0

Ennore Expansion

Sub Total 8218 236 0



NTPC SR (I&II) 4164 4164 4149

NTPC SR III 1125 1074 982

NLC TS - I 3066 2937 3189

NLC TS - II 3272 3450 3,291



NTPC Simhadri 1415 599 1079

MAPS 1508 1986 1775

KAIGA 1178 1278 1261


NTPC ER 897 342 319

NTPC Dadri 0 123 0

NTPC Vallur 1448 910 488

Kudunkulum 1716 178 0

NLC TS - II Expansion 1318 397 0

NLC - Tuticorin

Sub Total 26436 22755 21567

IPPs

GMR 495 615 610


PPN 2395 1541 1785

Madurai 575 285 357

ST-CMS 1795 1794 1665

ABAN 810 366 850

Penna 375 759 375

Sub Total 7020 5633 5971


Captive 582 705 595

Wind 5408 5067 7145

Biomass 56 783 11




June 2013


Solar 11 21 16

Sub Total 7259 8347 9195

Other Sources

Trading - Bilateral & Exchange 2000 9816 6,935

UI

81

NTPC NVVN ** 0 694 35

Sub Total 2000 10510 7051


Grand Total 76623 70434 66534


Kadamparai PSHES

**From 2012-13, the energy availability shown under NTPC NVVN corresponds to

bundled solar power

Renewable Purchase Obligation

3.62 In Para 8.18.4 of the comprehensive tariff order on wind energy (OrderNo.1 of 2009,

dated 20-03-2009), the Commission has fixed the Renewable Purchase Obligation

(RPO) at a minimum of 14% for 2010-11 in the area of distribution licensee in

accordance to section 86 (1) (e) of the Electricity Act 2003.

Section 86 (1) (e) of The Electricity Act, 2003

“86. (1) The State Commission shall discharge the following functions, namely: -

(e) promote cogeneration and generation of electricity from renewable sources of

energy by providing suitable measures for connectivity with the grid and sale of

electricity to any person, and also specify, for purchase of electricity from such

sources, a percentage of the total consumption of electricity in the area of a

distribution license;”

3.63 As regards FY 2011-12, the Commission in the first Amendment to Renewable

Energy Purchase Obligation Regulations, 2010 has fixed the RPO of 9% for all

sources of Renewable Energy put together and 0.05% for Solar separately.

3.64 As regards target for RPO in future years, Tamil Nadu Electricity Regulatory

Commission (Renewable Energy Purchase Obligation) Regulations, 2010 states as

under:

“2.If the RPO for any of the year is not specified by the Commission, the RPO

specified for the previous year shall be continued beyond the period till any revision

is effected by the Commission in this regard.”



June 2013

3.65 For FY 2012-13, the Commission has not prescribed any RPO Target. Therefore, the

Commission has considered same RPO Obligations as prescribed for FY 2011-12.

3.66 Accordingly, the Commission has calculated the quantum to be purchased through

RPO. The details of power purchase quantum in FY 2010-11, FY 2011-12 and FY

2012-13 is tabulated below. The Commission has applied the above mentioned

percentages of RPO from FY 2011-12 to FY 2012-13 on the energy requirement

determined for respective years in this Order. For FY 2010-11, Commission has

determined the RE requirement based on the energy requirement in the area of

distribution licensee for the whole year after considering TNEB (April 2010 to

October 2010) and TANGEDCO (November 2010 – March 2011) audited accounts

for FY 2010-11

Table 33: Renewable energy purchase requirement from FY 2010-11 to FY 2012-13 - in MUs


Energy Requirement 73555 69357 66534

RPO% from all sources 14%

9% 9%

RPO% from solar 0.05% 0.05%

Purchase from renewable requirement 10298 6242 5988

3.67 The energy purchased through Renewable Energy sources for FY 2010-11 (including

wheeling units) and for FY 2011-12 to FY 2012-13 (net of wheeling units) on the

basis of quantum of energy approved through various sources in this Order is

tabulated below:

Table 34: RPO Compliance of TANGEDCO for the first control period


Wind 8707 5711 5820*

Small Hydro 212 200 113


Biomass 110 73 11

Own wind generation 12 12 13

Total except solar 10038 7281 8710

Solar 2 11 16

NVVN Bundled Solar Power 0 0 35

Total including solar 10222 7986 8761

RPO % actually achieved for all sources

except solar 10.50% 11.10%

Solar

0.02% 0.08%

RPO% actually achieved for all sources 13.90% 10.52% 11.18%

*The wind generation submitted by TANGEDCO includes power procured through REC-APPC mechanism.

However for RPO Compliance, Commission has arrived at the wind generation considering the percentage

capacity registered under sale to board and not under REC-APPC mechanism

3.68 From the above table it can be observed that TANGEDCO has met the target of RPO,

14% in FY 2010-11 based on the total Renewable energy utilised in the area of the

licensee and for FY 2011-12 and FY 2012-13 has met a revised target of 9% net of

wheeling units.

3.69 TANGEDCO has also met the target of 0.05% of solar RPO during FY 2012-13.



June 2013

Energy Balance and Distribution Loss

3.70 Commission in its first order on Multi Year Tariff determination dated 31st July 2010

has approved transmission and distribution losses together and has set a loss reduction

strategy for reduction of T&D losses.

Table 35: T&D Loss trajectory set by the Commission for the first control period

Particulars 2010-11 2011-12 2012-13

Loss level in % 17.60 17.20 16.80

3.71 In the last tariff order Commission has re-estimated the T&D losses considering

energy sales without wheeling and additional power supply required for Kadamparai

pump mode.

3.72 In accordance to Commission’s approach TANGEDCO in its Petition has submitted

the energy balance and actual T&D losses. The energy balance and T&D loss

submitted by TANGEDCO in its Petition is given below:

Table 36: Energy Balance submitted by TANGEDCO for the first control period


Power Purchase from Own Generation 10212 26027 23694

Power Purchase from Other Sources 17413 43607 46845

Total Power Purchase 27625 69633 70540

T&D Loss (MU) 6017 15322 15237

T&D Loss (%) 21.78% 22.00% 21.60%

Total Sales 21608 54311 55303

Sales to Consumers 21276 53777 54742

Power Supply to Kadamparai 332 534 561

3.73 It is pertinent to mention that Commission has initiated the Suo-Moto proceedings

against TANGEDCO for non compliance in the matter of T&D loss determination as

directed by it and the Hon’ble APTEL. The Commission has in the absence of

scientific data for loss determination, fixed the T&D loss level at 16.4% for FY 2013-

14 and has clarified that it shall assume loss percentage at 16% and 15.6% for FY

2014-15 and FY 2015-16 respectively, if the necessary data is not furnished by

TANGEDCO.

The relevant extracts of that order are given below:

“The Commission in its Order No.1 of 2012 dated 30-3-2012, had adopted the T&D

loss of 17.6% for 2010-11 and 17.2% for 2011-12. Commission adopted T&D loss of

16.80% for 2012-13. By the same analogy, T&D loss of 16.40% is approved for 2013-

14. As and when the TANGEDCO comes out with the scientific study on T&D loss as

specified in the Regulations, the Commission may review and refix the T&D loss

norms subject to prudent check. If no study report is submitted for consideration of



June 2013

the Commission, T&D loss for FY 2014-15 shall be reckoned as 16% and for FY

2015-16 shall be reckoned as 15.6%. Out of the above T&D loss limit, the distribution

loss shall be arrived at after deducting the transmission loss as approved by the

Commission in the respective tariff order.

3.74 Hence, Commission arrived at the energy requirement for TANGEDCO considering

the approved sales and losses as per 31st July 2010 order and Suo-Moto order on

distribution losses dated 4th June 2013. Also, from this order Commission is treating

the distribution loss and transmission loss separately. For arriving at the sales below

33 kV, at 110 kV and at 230 kV, Commission has relied on the percentages arrived

based on the data provided by TANGEDCO. The energy balance in distribution

periphery and energy required by TANGEDCO for the first control period are

tabulated below. The energy balance is shown considering total energy wheeled in the

distribution system while energy requirement has been arrived considering approved

sales and losses.

Table 37: Energy Balance in distribution periphery

Parameter FY 2010-11 FY 2011-12 FY 2012-13

Sale to Consumers below 33 kV (MU) 19868 50366 47338

Additional Power to Kadamparai (MU) 42 28 26

Wheeled Units below 33 kV 2221 5780 6724

Distribution Loss (%) 14.82% 14.50% 14.10%

Distribution Loss (MU) 3850 9527 8878

Energy Input at Distribution periphery (MU) 25982 65701 62966

Table 38: Energy required by TANGEDCO at TN Periphery during the first control period







110 kV Sales (MU) 983 2892 2718

110 kV Losses (%) 1.94% 1.94% 1.90%

110 kV Losses (MU) 482 1223 1121

Energy Input at 110 kV 24839 63056 58977

230 kV Sales (MU) 426 680 639

230 kV Losses (%) 0.84% 0.76% 0.80%

230 kV Losses (MU) 214 488 481

Energy input at TN Periphery 25478 64224 60097

3.75 Commission reiterates its direction given to TANGEDCO in order on Suo-Moto

Petition on T&D losses.

a) TANGEDCO shall conduct a third party scientific study to arrive at the reasonable consumption of unmetered services and thereby the technical



June 2013

losses of their network in the following manner.

i. DT metering with AMR facility shall be provided atleast to one feeder

feeding agricultural services predominantly in each circle of the

TANGEDCO. Similar metering shall be installed/made available at the

Sub-Station end of the 11KV / 22KV feeders.

ii. Similar arrangements may be made to measure the consumption of Hut

Services.

iii. To calculate the LT line loss, similar DT metering and feeder metering

shall be done atleast in one feeder which has considerable LT network

with 100% consumer metering.

iv. The online measurement taken for a period of one year shall be used to

arrive at the voltage wise T&D losses for the respective FY. Such data

shall be submitted once in every 2 months to the Commission starting from

October 2013.

3.76 The Commission observed that the actual T&D loss for FY 2010-11, FY 2011-12 and

FY 2012-13 are more than the approved losses. Commission’s approach on additional

cost incurred by TANGEDCO on account of increased T&D losses has been

discussed later in this Chapter.

Fixed Expenses

3.77 In this section, expenses related to fixed cost for the first control period (FY 2010-11

and FY 2012-13) will be reviewed and approved by the Commission. The fixed

expenses are broadly divided into the following heads:

i. Operation and Maintenance Expenses

ii. Depreciation

iii. Interest on long term loans

iv. Return on Equity

v. Interest on working capital loans

vi. Other debits

Operation and Maintenance Expenses

3.78 The O&M expenses approved by the Commission in its last tariff order and claimed

by TANGEDCO in its current Petition are tabulated below:



June 2013

Table 39: O&M expenses approved by Commission in last tariff order and claimed in this Petition (Rs.

Cr.)

Plant

As per last year tariff order Current Petition

2010-11 2011-12 2012-13 2010-11 2011-12 2012-13

Ennore TPS 39.63 98.91 102.86 40.73 109.34 120.48

Tuticorin TPS 44.70 111.57 116.03 60.92 190.72 208.29

Mettur TPS 34.51 86.13 89.57 48.08 102.59 115.05

North Chennai TPS 50.58 126.24 131.29 46.72 116.00 128.37

Total Thermal 169.41 422.85 439.76 196.44 518.66 572.20

Tirumakottai GTPS 3.10 7.74 8.05 2.73 10.06 10.95

Kuttalam GTPS 8.61 17.04 17.72 0.82 7.14 7.78

Basin Bridge GTPS 2.49 6.22 6.47 2.72 5.69 6.32

Valuthur GTPS 3.45 8.62 8.96 21.06 7.95 8.88

Total Gas 17.66 39.63 41.21 27.34 30.84 33.93

Erode HEP 14.34 35.79 37.22 11.10 26.52 29.83

Kadamparai HEP 8.03 20.03 20.83 10.88 22.05 24.32

Kundah HEP 16.13 37.34 38.83 15.18 35.91 39.86

Tirunelveli HEP 9.70 24.22 25.19 9.66 24.19 27.50

Total Hydro 48.19 117.38 122.07 46.83 108.67 121.50

Total Generation 235.26 579.86 603.04 270.60 658.16 727.63

Total Distribution 1092.94 2727.99 2837.11 1388.30 3652.49 3690.85

Total TANGEDCO 1328.20 3307.85 3440.15 1658.90 4310.66 4418.48

3.79 From the above table it can be observed that TANGEDCO in this true-up and

performance review exercise has sought for Commission’s approval for the increase

in O&M expenses ranging from 25% to 30% for the first control period.

3.80 In response to data gaps and during discussions held with TANGEDCO officials, it

was clarified that one of the reasons for this variation is due to segregation of

accounts between TANGEDCO and TANTRANSCO

3.81 It is pertinent to mention that GoTN vide G.O.(Ms) No 114 Energy Dept., dated 08-

10-2008 have accorded in principle approval for the reorganization of TNEB.

Pursuant to this G.O. TANGEDCO and TANTRANSCO were incorporated on 1st

December 2009 and started functioning as such w.e.f 1st November 2010. Hence,

TANGEDCO and TANTRANSCO have been maintaining separate accounts from

then onwards.



June 2013

3.82 Prior to this there were separate accounts for each generating station. However, for

transmission and distribution expenses consolidated accounts were maintained.

TANGEDCO in its last Petition had segregated the O&M expenses under

transmission and distribution heads with some assumptions. In previous Petition of

TN power utilities, Employee expenses and A&G expenses were bifurcated between

Distribution and Transmission business based on number of employees while R&M

expenses have been bifurcated based on GFA.

3.83 However TN Power utilities have clarified in their current MYT Petition that they

have submitted the actual expenses based on their audited accounts. Also,

TANGEDCO in its Petition has submitted that it was unbundled from the erstwhile

TNEB only on 31st Oct 2010 and it is difficult for it to derive the O&M expenses

pertaining to Transmission activities for the last 5 years. Hence, it has projected the

expenses from FY 2012-13 based on the expenses for the FY 2010-11 and FY 2011-

12

3.84 It is pertinent to mention that in the process of the approval of O&M expenses, the

Commission will be guided by the following regulations

Regulation – 14 of TNERC Tariff Regulations

“14. Multiyear tariff

(5) All the uncontrollable costs shall be allowed as pass through in tariff and

the uncontrollable costs will include the following:

(a) Cost of fuel;

(b) Costs on account of inflation;

(c) Taxes and duties; and

(d) Variation in power purchase unit cost from base line level

including on account of hydro-thermal mix in case of force majure and

adverse natural events like drought

(6) The Operation and Maintenance cost shall be controllable cost and be

based on escalation indices or other mode determined during determination

of tariff for the base year.

Regulation-25 of TNERC Tariff Regulations:


1. The operation and maintenance expenses shall be derived on the basis of

actual operation and maintenance expenses for the past five years previous to

current year based on the audited Annual Accounts excluding abnormal

operation and maintenance expenses, if any, after prudence check by the



June 2013

Commission. The Commission may, if considered necessary engage

Consultant / Auditors in the process of prudence check for correctness.

2. The average of such normative operation and maintenance expenses after

prudence check shall be escalated at the rate of 4% per annum to arrive at

operation and maintenance expenses for current year i.e. base year and

ensuing year.

3. The base operation and maintenance expenses so determined shall be

escalated further at the rate of 4% per annum to arrive at permissible

operation and maintenance expenses for the relevant years of tariff period.

…”

3.85 In following para’s each component of O&M expenses will be discussed in detail and

Commission’s approval for the same is accorded.

Employee Expenses

3.86 TANGEDCO has filed the actual employee expenses based on audited accounts for

FY 2010-11 and based on provisional accounts for FY 2011-12. It has then projected

the employee costs based on the following assumptions:

i. Basic salary and grade pay have been considered with an escalation of 5% for

FY 2013-14 to FY 2014-15 and 10% for FY 2012-13 and FY 2015-16 due to

wage revision.

ii. Escalation of DA rate at 15% per annum

iii. Other expenses such as surrender leave, terminal benefits, pension schemes

etc. at 10%.

3.87 On preliminary scrutiny of employee expenses proposed by TANGEDCO it was

observed that there is significant increase in employee expenses corresponding to

TANGEDCO while there is decrease in employee costs pertaining to

TANTRANSCO. During the discussions with TANGEDCO officials it was

mentioned that in the last petition the employee expenses submitted under distribution

and transmission petition was based on certain assumptions due to unavailability of

separate accounts. However, they have clarified that all the employee expenses are

being currently accounted under respective audited accounts except for terminal

benefits. TANGEDCO has stated that entire pension payments are being made by

TANGEDCO on behalf of TNEB and hence the terminal benefits pertaining to

TANTRANSCO are also included in TANGEDCO audited accounts.

3.88 This fact was also mentioned in the audited accounts for FY 2011-12 of TANGEDCO

under point 9 of “Statement-5: Notes to Accounts” and is reproduced below:

“The pension payments of existing pensioners of erstwhile TNEB are being paid by

TANGEDCO since no segregation of pensioner’s liability has been finalized in the

provisional transfer scheme. The payments of pension to those who have retired from

01.10.2010 to 31.03.2013 are also made by TANGEDCO and out of it the



June 2013

TANTRANSCO’s share has not been determined so far. As and when it’s ascertained,

the company has to claim the payment from TANTRANSCO.”

3.89 Hence for regulatory accounting and approval, Commission in consultation with

TANGEDCO and TANTRANSCO officials have bifurcated the terminal benefits

based on the employee ratio of 6:1 (TANGEDCO to TANTRANSCO). In this true-up

Commission will approve the terminal benefits expenses for TANGEDCO only to the

extent of its liability.

Table 40: Re-estimation of terminal benefits of TANGEDCO and TANTRANSCO (Rs. Cr.)

Parameter

Actual figures as per Audited

Accounts

Commissions Re-Estimate –

(Based on 6:1 ratio)

FY 2011 FY 2012 FY 2011 FY 2012

Terminal Benefits –

TANGEDCO 601.50 1,591.55 523.97 1,383.09

Terminal Benefits –

TANTRANSCO 9.79 22.06 87.33 230.52

Total 611.29 1,613.61 611.29 1,613.61

Table 41: Segregation of Terminal benefits between generating stations and distribution business (Rs.

Cr.)

Year

TANGEDCO

Claimed for Own

Generation Stations in

MYT Petition

Approved for

Distribution Business

FY 2010-11 523.97 8.93 515.04

FY 2011-12 1,383.09 23.13 1,359.96

3.90 The employee expenses after accounting for terminal benefits have only increased

marginally for TANGEDCO except for MTPS and TTPS compared to Commission’s

approved employee expenses. For these two stations in the last order Commission has

approved the employee expenses based on five year average to arrive at the employee

expense for base year. Commission is of the view that averaging the last five years

(FY 2006 to FY 2010) expense had resulted in approving the employee expense for

these stations equivalent to the median year (i.e. for FY 2008).

3.91 Hence Commission is accepting the actual employee expenses for FY 2010-11 and

FY 2011-12 as submitted by TANGEDCO for all the generating stations and

distribution business for the reasons stated above.

3.92 Though TANGEDCO has proposed escalations of more than 4% for various

components of employee expenses for FY 2012-13, Commission in accordance with

its regulation has escalated the approved employee expenses of FY 2011-12 at 4% on

all components except for DA for arriving at the employee expenses for FY 2012-13.

However, if the proposed pay revision increase the employee expenses significantly,

as submitted by TANGEDCO, then TANGEDCO is required to quantify the impact

due to pay revision and submit to the Commission during the true-up exercise for FY

2012-13.



June 2013

3.93 As per the TNERC Tariff Regulations increase in costs due to inflation is required to

be passed through in tariff. DA percentage notified by the GoTN is dependent on

inflation and hence increase in employee cost to the extent of DA variation will be

allowed as a pass through in tariff. Hence, the DA rates as notified by GoTN have

been used for estimating the dearness allowance instead of taking an escalation of 4%

as per TNERC Tariff Regulations.

3.94 The employee capitalization for FY 2012-13 of generating stations has been arrived

based on the percentage of employee expenses capitalized in FY 2010-11 and FY

2011-12. However, for distribution business the employee capitalization as per

audited accounts comes to 5%, which is on a lower side compared to historic trend.

Also, TANGEDCO has proposed a higher capitalization rate of 15% for FY 2012-13.

In view of these discrepancies Commission has relied on average employee

capitalization of 9% based on historical data.

Table 42: Estimation of average DA rate applicable for FY 2012-13

Year Eff. Date Rate of DA Months Avg Rate

2012-13

1/1/2012 65% 3

72.25% 1/7/2012 72% 6

1/1/2013 80% 3

3.95 Based on the above approach and methodology, the employee costs submitted by

TANGEDCO and approved by the Commssion is tabulated below:

Table 43: Approved employee expenses for FY 2010-11 (Rs. Cr.)

Plant Last Tariff Order Petition Commission

Ennore TPS 22.55 24.97 24.97

Tuticorin TPS 23.28 32.42 32.42

Mettur TPS 18.99 30.39 30.39

North Chennai TPS 23.67 23.32 23.32

Total Coal 88.49 111.09 111.09

Tirumakottai GTPS 1.49 1.21 1.21

Kuttalam GTPS 1.33 0.00 0.00

Basin Bridge GTPS 1.53 1.38 1.38

Valuthur GTPS 0.54 2.21 2.21

Total Gas 4.90 4.80 4.80

Erode HEP 11.94 9.74 9.74

Kadamparai HEP 6.13 7.36 7.36

Kundah HEP 9.28 9.85 9.85

Tirunelveli HEP 7.64 7.85 7.85

Total Hydro 34.98 34.80 34.80

Total Generation 128.38 150.68 150.68

Distribution 1,052.15 1,305.27 1,228.75

TANGEDCO 1,180.53 1,455.95 1,379.43



June 2013



Ennore TPS 56.27 62.08 62.08

Tuticorin TPS 58.12 82.06 82.06

Mettur TPS 47.40 73.04 73.04


Total Coal 220.88 267.67 267.67





Total Gas 10.50 16.41 16.39

Erode HEP 29.79 22.88 22.88


Kundah HEP 19.96 24.50 24.50


Total Hydro 84.10 82.06 82.06


Distribution 2626.16 3437.05 3206.77

TANGEDCO 2941.64 3803.19 3572.89



Ennore TPS 58.52 71.19 65.94

Tuticorin TPS 60.44 94.40 91.46

Mettur TPS 49.30 84.09 81.52


Total Coal 229.71 308.71 298.33





Total Gas 10.92 18.80 17.09

Erode HEP 30.99 26.01 28.84


Kundah HEP 20.75 28.00 26.85


Total Hydro 87.47 93.59 94.27


Distribution 2,731.21

3,447.65

3,360.21

TANGEDCO 3059.30 3868.74 3769.90



June 2013

Repair and Maintenance Expenses

3.96 On preliminary scrutiny, Commission has found that R&M expenses for few stations

such as VGTPS, ETPS, TTPS and TGTPS have increased significantly. In response to

data gaps, TANGEDCO has replied in a generic manner without giving any specific

reasons for increase in these expenses. In this context it is pertinent to mention that

the Commission is already allowing 0.5% of capital cost of generating assets for self

insurance and any abnormal increase in R&M expenses due to unforeseen reasons can

be met through this fund.

3.97 R&M expenses being completely a controllable expense and since TANGEDCO

could not substantiate the abnormal increase in R&M expenses with appropriate

reasons, Commission in this order is approving the R&M expenses as approved in the

last order except for generating stations such as TTPS, MTPS and VGTPS..

3.98 In the last order for TTPS, MTPS and VGTPS generating stations, Commission had

approved the R&M expenses in accordance to its Tariff Regulation by taking the

average R&M expenses of last five financial years i.e. from FY 2005-06 to FY 2009-

10 in order to arrive at the R&M expenses for the base year. In this process of

averaging the R&M expenses arrived will correspond to the median year i.e. FY

2007-08 and hence average expenses must be escalated at 4% year on year for

arriving at the R&M expenses for the base year FY 2010-11. Hence in this order

Commission is approving additional R&M expenses to these stations to the extent of

this correction.

3.99 In the previous order, Commission had approved the R&M expenses as claimed by

TANGEDCO. Also, historically the R&M expenses were varying erratically and it

may not be appropriate to take the average R&M expenses for the last five years.

Hence, Commission has approved the R&M expenses for KGTPS as claimed by

TANGEDCO based on actual expenditure incurred.

3.100 As already mentioned earlier, in the last Petition TANGEDCO and TANTRANSCO

have segregated the R&M expenses between distribution and transmission business

based on certain assumptions. However during review of current audited accounts it

has been observed that R&M expenses of TANTRANSCO have decreased while

R&M expenses of TANGEDCO have increased. It was also confirmed by

TANGEDCO during the discussion that no part of R&M expenses on account of

TANTRANSCO are being booked in TANGEDCO accounts. Hence, the variation in

expenses is only due to proper accounting practices adopted after unbundling and that

approach will continue in future.

3.101 Commission is of the view that ratio of R&M expenses approved for transmission and

distribution business may change but the total expenses cannot increase. Hence while

approving the R&M expenses for the distribution business, increase in R&M expenses

only to the tune of decrease in R&M expenses of TANTRANSCO compared to that

approved in last order has been allowed.

3.102 Based on the above approach, the R&M expenses submitted by TANGEDCO and

approved by the Commission is tabulated below:



June 2013

Table 46: Approved R&M expenses for FY 2010-11 (Rs. Cr.)


Ennore TPS 13.36 14.34 13.36

Tuticorin TPS 13.26 24.30 14.91

Mettur TPS 10.90 12.82 12.27


Total Coal 60.10 71.82 63.12





Total Gas 8.25 21.46 2.60

Erode HEP 0.43 0.37 0.43


Kundah HEP 1.32 0.79 1.32


Total Hydro 3.23 2.26 3.23


Distribution 17.23 24.71 24.48

TANGEDCO 88.82 120.25 93.42



Ennore TPS 33.36 40.83 33.36

Tuticorin TPS 33.09 98.16 37.23

Mettur TPS 27.22 22.03 30.62


Total Coal 150.02 222.82 157.55





Total Gas 16.71 11.32 8.23

Erode HEP 1.09 1.06 1.09


Kundah HEP 2.23 1.28 2.23


Total Hydro 7.01 5.42 7.01



TANGEDCO 216.75 303.44 231.59



June 2013


Plant

Last Tariff

Order Petition Commission

Ennore TPS 34.69 42.47 34.69

Tuticorin TPS 34.42 102.08 38.72

Mettur TPS 28.31 22.91 31.84


Total Coal 156.02 231.74 163.85





Total Gas 17.37 11.78 8.56

Erode HEP 1.13 1.10 1.13


Kundah HEP 2.32 1.33 2.32


Total Hydro 7.29 5.64 7.29



TANGEDCO 225.42 315.74 239.77

Administrative and General Expenses

3.103 On preliminary scrutiny, Commission has found that A&G expenses for generating

stations has decreased while that of distribution business has increased compared to

Commission approved A&G expenses. This is mainly due to accounting of self-

insurance charges pertaining to generating stations in distribution business.

3.104 Unlike employee expenses, A&G expenses are completely controllable. Hence,

Commission in this order is approving the A&G expenses as approved in the last

order except for few generating stations for which Commission feels that the

approved numbers in the last order are required to be revisited.

3.105 In the last order for TTPS, MTPS and VGTPS generating stations, Commission has

approved the A&G expenses in accordance to its Tariff Regulation by taking the

average A&G expenses of last five financial years i.e. from FY 2005-06 to FY 2009-

10 in order to arrive at the A&G expenses for the base year. In this process of

averaging the A&G expenses arrived will correspond to the median year i.e. FY 2007-

08 and hence average expenses must be escalated at 4% year on year for arriving at

the A&G expenses for the base year FY 2010-11. Hence in this order Commission has

approved additional A&G expenses of these stations to the extent of this correction.



June 2013

3.106 Similar to R&M expenses, in its last Petition TANGEDCO and TANTRANSCO have

segregated the A&G expenses between distribution and transmission business based

on certain assumptions. However during review of audited accounts it has been

observed that A&G expenses of TANTRANSCO have decreased while A&G

expenses of TANGEDCO have increased. It was also confirmed by TANGEDCO

during the discussion that no part of A&G expenses on account of TANTRANSCO

are being booked in TANGEDCO accounts. Hence, the variation in expenses is only

due to change in accounting methodology adopted and that approach will continue in

future.

3.107 Commission is of the view that ratio of A&G expenses approved for transmission and

distribution business may change but A&G expense being a controllable expense, the

total A&G expenses cannot increase more than that approved by the Commission.

Hence while approving the A&G expenses for the distribution business, increase in

A&G expenses only to the tune of decrease in A&G expenses of TANTRANSCO

compared to that approved in last order has been allowed.

3.108 Based on the above approach, the A&G expenses submitted by TANGEDCO and


Table 49: Approved A&G expenses for FY 2010-11 (Rs. Cr.)

Plant

Last Tariff


Ennore TPS 3.72 1.42 3.72

Tuticorin TPS 8.16 4.20 9.18

Mettur TPS 4.61 4.88 5.19


Total Coal 20.81 13.53 22.41





Total Gas 4.50 1.08 4.76

Erode HEP 1.97 0.99 1.97


Kundah HEP 5.53 4.54 5.53


Total Hydro 9.98 9.77 9.98



TANGEDCO 58.85 82.70 65.63



June 2013


Plant

Last Tariff


Ennore TPS 9.28 6.43 9.28

Tuticorin TPS 20.36 10.51 22.90

Mettur TPS 11.51 7.53 12.95


Total Coal 51.96 28.17 55.93





Total Gas 12.42 3.11 13.08

Erode HEP 4.91 2.58 4.91


Kundah HEP 15.15 10.13 15.15


Total Hydro 26.27 21.19 26.27


Distribution 58.81 151.56 61.79

TANGEDCO 149.45 204.02 157.07


Plant

Last Tariff


Ennore TPS 9.65 6.83 9.65

Tuticorin TPS 21.18 11.81 23.82

Mettur TPS 11.97 8.05 13.46


Total Coal 54.03 31.76 58.17





Total Gas 12.91 3.36 13.60

Erode HEP 5.10 2.71 5.10


Kundah HEP 15.76 10.52 15.76


Total Hydro 27.32 22.28 27.32


Distribution 61.17 176.61 57.14

TANGEDCO 155.43 234.00 156.23



June 2013

3.109 Based on the above approach, the O&M expenses submitted by TANGEDCO and


Table 52: Approved O&M expenses for FY 2010-11 (Rs. Cr.)


Ennore TPS 39.63 40.73 42.05

Tuticorin TPS 44.70 60.92 56.51

Mettur TPS 34.50 48.09 47.85


Total Coal 169.41 196.46 196.64





Total Gas 17.65 27.33 12.16

Erode HEP 14.34 11.10 12.14


Kundah HEP 16.13 15.18 16.70


Total Hydro 48.19 46.82 48.00


Distribution 1092.94 1388.3 1281.71

TANGEDCO 1328.19 1658.91 1538.51



Ennore TPS 98.91 109.34 104.72

Tuticorin TPS 111.57 190.73 142.19

Mettur TPS 86.13 102.60 116.61


Total Coal 422.85 518.66 481.16





Total Gas 39.64 30.85 37.71

Erode HEP 35.79 26.52 28.88


Kundah HEP 37.34 35.91 41.88


Total Hydro 117.38 108.67 115.34


Distribution 2727.98 3652.49 3327.36

TANGEDCO 3307.85 4310.67 3961.57



June 2013


Plant

Last Tariff


Ennore TPS 102.86 120.49 110.28

Tuticorin TPS 116.04 208.29 154.00

Mettur TPS 89.58 115.05 126.82


Total Coal 439.78 572.20 520.36





Total Gas 41.20 33.92 39.25

Erode HEP 37.22 29.82 35.07


Kundah HEP 38.83 39.85 44.93


Total Hydro 122.06 121.48 128.87


Distribution 2837.11 3690.86 3477.42

TANGEDCO 3440.15 4418.46 4165.90

Segregation of accounts

3.110 In terms of the Transfer Scheme notification dated 02nd January 2012, the

Government of Tamil Nadu had assigned the Assets and Liabilities (as on 31.03.2010)

to TANGEDCO on a Provisional basis and hence the transaction for 7 months i.e.

from 1st April 2010 to 30th October 2010, does not get reflected in the opening

balance sheet of the TANGEDCO as specified in the Transfer Scheme.

3.111 TANGEDCO has filed the Petition in accordance with the provisional transfer scheme

and hence the opening GFA as on November 2010 is considered equal to the closing

GFA as on March 2010.

3.112 In addition, the opening GFA as on November 2010 includes the revaluation reserve

of Rs. 5579.40 Crs. The summary of opening GFA as per provisional transfer scheme

dated 2nd January 2012 is tabulated below:

Table 55: TANGEDCO GFA as on Nov 2010 - based on provisional transfer scheme (Rs. Cr)

Particulars Generation Distribution Total G&D

Before Revaluation 10,558.49 7,668.03 18,226.52

Revaluation Reserve as on Nov 2010 1889.76 3689.64 5,579.40

Including Revaluation 12,448.25 11,357.67 23,805.92



June 2013

3.113 During the discussion, TANGEDCO has informed that revaluation of assets is still

underway and the GFA as on Nov 2010 will be only finalized in the final transfer

scheme. The GFA in the TANGEDCO Petition was inclusive of this revaluation

reserve as per provisional transfer scheme. However, in reply to data gaps,

TANGEDCO has revised the GFA excluding the revaluation reserve and segregated

the loans and other expenses between generation business and distribution business

based on the GFA prior to revaluation reserve. TANGEDCO also clarified that

revaluation reserve will not have any major impact in depreciation calculations as the

increase in GFA was majorly due to revaluation of land.

3.114 Commission is of the view that revaluation of assets is just a book adjustment that

neither requires any fund nor generates additional cash flow. Also as revaluation of

assets being not finalized, Commission in this order is accepting TANGEDCO’s

revised submission and based its calculations on GFA without revaluation reserve.

The opening GFA as on November 2010 considered by the Commission is tabulated

below:

Table 56: Opening GFA as on November 2010 (Rs. Cr)

Power Station

Revised Submission

GFA

(W/o Revaluation Reserve)

Ennore TPS 1,056.84

Tuticorin TPS 1,853.70

Mettur TPS 1,049.19

North Chennai TPS 1,987.19

Total Thermal 5,946.92

Tirumakottai GTPS 450.75

Kuttalam GTPS 351.05

Basin Bridge GTPS 549.01

Valuthur GTPS 540.82

Total Gas 1,891.63

Erode HEP 672.31

Kadamparai HEP 363.48

Kundah HEP 953.74

Tirunelveli HEP 330.58

New Hydro Addition

Bhavani Barrage 6.92

Bhavani Katlai 16.28

Periyar 33.75

Total Hydro 2,377.07

Tirunelveli 206.45

Udumalpet 136.41

Total Wind 342.86

Total Generation 10,558.49

Total Distribution 7668.03

Total G&D – without

revaluation reserve 18,226.52

Revaluation reserve 5579.40

Total G&D – inclusive of

revaluation reserve 23805.92



June 2013

Capital Expenditure and capitalization

3.115 Regulation 17 (5) of the Tariff Regulations, 2005 and Regulation 3 (v)of the Tariff Regulation under MYT framework specifies that the licensee shall get the capital

investment plan approved by the Commission before filing ARR and Application for

determination of Tariff. However, TANGEDCO has not complied with this provision.

3.116 TANGEDCO has filed the capital expenditure for the first control period along with the Petition and also revised the capitalization initially filed in its capitalization

Petition dated 5th October 2012.

3.117 There were many discrepancies in the capital expenditure and capitalization

information filed in the Petition. The capital expenditure filed by TANGEDCO was

without any cost benefit analysis. In addition, TANGEDCO has also not provided any

information of sources of funding, broad details and physical quantum for the

proposed capital expenditure.

3.118 In response to data-gaps and clarifications sought by the Commission, TANGEDCO

has provided some information and revised the capital expenditure and capitalization

proposed. In order to verify the prudency of capital expenditure, Commission has

developed suitable formats and has directed TANGEDCO to submit the capital

expenditure information in those formats. However, the utility was able to provide

only partial information in the required formats.

3.119 Even after repeated directions, Commission has observed that TANGEDCO has not

submitted the capital expenditure and capitalization information to the satisfaction of

the Commission.

3.120 In the revised capital expenditure, capitalization and capital works in progress (CWIP)

submitted by TANGEDCO, Commission observed that the closing CWIP for some of

the generating stations for FY 2011-12 and FY 2012-13 was negative. During

discussions, TANGEDCO has clarified that this was due to non consideration of

capital expenditure and capitalization during the first seven months of the FY 2010-

11. Later, TANGEDCO has revised the capital expenditure, capitalization and CWIP

statement after considering actual expenses during the first seven months.

3.121 Commission reiterates that the data quality and iteration that went through the capital

expenditure and capitalization schedule along with its GFA schedule needed to be

substantially improved. Commission directs TANGEDCO to reconcile its accounts

with respect to capital expenditure and prepare the scheme wise data as per the

formats specified by the Commission. Commission also directs TANGEDCO to

file the progress of the capital expenditure and capitalization on quarterly basis.



June 2013

3.122 It is also pertinent to mention that TANGEDCO has finalized its audited accounts

based on the provisional transfer scheme and the opening CWIP and GFA does take

into consideration the actual capital expenditure and expenses incurred during the first

seven months of FY 2010-11. Hence, this mismatch and ambiguity in the capital

expenditure and capitalization is majorly due to non finalization of transfer scheme

and hence Commission directs the power utilities to get the transfer scheme finalized

through GoTN at the earliest.

3.123 On scrutiny of audited accounts it was observed that the capitalization indicated for FY 2010-11 and FY 2011-12 has resulted in increase in fixed assets to that extent.

Hence, Commission is provisionally accepting the capital expenditure and

capitalization schedule as proposed by TANGEDCO.

3.124 The Commission observed that there are number of new generating stations for which

TANGEDCO had neither sought prior approval of their capital investment plan nor

applied for determination of tariff in advance for the new generating stations.

3.125 TANGEDCO is required file separate Petitions for approval of the tariff for the new generating stations along with accounts for these generating stations duly certified by

statutory auditor. On Commissions directive, TANGEDCO has submitted partial

information for new thermal stations as per the formats prescribed by TNERC Tariff

Regulations. However, the information is not certified by statutory auditor. With

respect to new hydro stations TANGEDCO has not provided any information.

3.126 Regulation 6 (7) (i) (a) of the TNERC Tariff Regulations, 2005 specifies the following:

“A generation company or a licensee may make an application as per Appendix – I to

these Regulations, for determination of provisional tariff in advance of the anticipated

date of completion of the project, based on the capital expenditure actually incurred

upto the date of making of the application or a date prior to making of the

application, duly audited and certified by the statutory auditors, and the provisional

tariff shall be charged from the date of commercial operation of the respective units

of the generation station or the line or sub-station of the transmission system.”

3.127 Hence, the Commission directs TANGEDCO to file the separate petitions based on TNERC Regulations, within 90 days of issuance of this Order. In failure of

this compliance, Commission may approve the capital cost based on industry

norms and may disallow all expenses allowed due to provisionally approved

capital cost in its next tariff order.

3.128 The capital expenditure and capitalization considered in this order is tabulated below. Any variation in capital expenditure and capitalization due to prudence verification

based on the data submitted by the TANGEDCO and finalization of transfer scheme

will be addressed during the next tariff order.



June 2013

Table 57: Capital expenditure and capitalization provisionally accepted by the Commission (Rs. Cr)

Plant

Capital Expenditure Capitalization

FY 2010-11 FY 2011-12 FY 2012-13 FY 2010-11 FY 2011-12 FY 2012-13

Ennore TPS 0.36 7.39 4.06 - 0.21 2.43

Tuticorin TPS 6.77 24.21 92.36 11.16 8.97 55.42

Mettur TPS 1.21 17.71 103.15 56.04 11.89 61.89

North Chennai

TPS 1.28 - 41.44 1.85 24.66 24.86

NCTPS Stage-II 739.20 3,646.96 418.90 - - -

MTPS Stage-III 789.32 595.67 426.56 - - -

Ennore Expansion 0.42 0.20 437.89* - - -

Total Thermal 1538.55 4,292.15 1,524.36 69.05 45.73 144.60

Tirumakottai

GTPS 2.37 1.08 5.27 0.09 3.79 3.16

Kuttalam GTPS 10.27 0.82 137.42 - 14.79 137.42

Basin Bridge

GTPS - - - 2.33 - -

Valuthur Unit-I 14.51 60.24 13.86 - 11.02 70.89

Valuthur Unit-II - -

- - -

Total Gas 27.15 62.14 156.55 2.41 29.60 211.47

Erode HEP 0.82 1.46 59.25 0.56 1.59 35.55

Kadamparai HEP 0.13 1.58 0.11 0.02 2.83 0.06

Kundah HEP 6.30 4.26 6.05 5.41 4.43 1.35

Tirunelveli HEP 1.42 42.86 26.57 17.45 15.08 25.94

New Hydro

Addition - - -

Bhavani Barrage 30.91 69.11 42.76 - - -

Bhavani Katlai 12.43 168.39 69.60 - - -

Periyar 19.91 37.07 13.17 - - -

Total Hydro 71.92 324.73 217.50 23.44 23.93 62.90

Tirunelveli 0.20 0.94 - - - -

Udumalpet

0.03 - - - -

Total Wind 0.20 0.97 - - - -

Cogen Sugar

Mills Under

Modernisation

184.61 447.11 208.26 - - -

Total Generation 1822.43 5,127.11 2,106.67 94.90 99.26 418.98

Total

Distribution 617.06 1,506.92 1,528.10 277.19 1,021.16 1,797.94

TANGEDCO 2439.49 6,634.03 3,634.77 372.09 1,120.42 2,216.92

*Needs to be examined and reconciled.



June 2013

Depreciation

3.129 In its Petition, TANGEDCO has submitted the opening gross block for each of the

generating plant and for distribution function for FY 2010-11 (5 months) in line with

the provisional transfer scheme notified by the Government of Tamil Nadu vide

notification dated 2nd January 2012.

3.130 TANGEDCO has estimated the depreciation for FY 2010-11 and FY 2011-12 in line

with the audited accounts for FY 2010-11 and provisional accounts for FY 2011-12

respectively. It was also submitted that the depreciation rate considered in annual

accounts are in line with the TNERC Tariff Regulations and has been calculated only

on the opening balance of GFA as per provisional accounts.

3.131 Commission has observed that the revaluation reserve as per provisional transfer

scheme has not been accounted properly and entire revaluation reserve has been

accounted for distribution business. In response to this query, TANGEDCO has later

revised the opening GFA based on provisional accounts and without considering the

revaluation reserve.

3.132 TANGEDCO also re-estimated the depreciation on this revised GFA and during the

discussions TANGEDCO has submitted to the Commission that the revaluation of

assets is still in process and the impact due to revaluation reserve can be addressed on

finalization of transfer scheme. During discussions TANGEDCO also submitted there

will not be any major change in depreciation due to change in opening GFA as the

revaluation reserve majorly corresponds to land. However, Commission is of the view

that revaluation of assets should not result in tariff increase.

3.133 In another query raised by the Commission regarding the depreciation rates used by

TANGEDCO, it has submitted that TANGEDCO has used the weighted average

depreciation rate for the particular group of asset arrived based on depreciation rates

specified in the Tariff Regulations.

3.134 TNERC Tariff Regulations 2005 specifies following guidelines for calculation of depreciation:

24. Depreciation

For the purpose of tariff, depreciation shall be computed in the following manners:

i. The value base for the purpose of depreciation shall be historical cost of the

asset.

ii. The depreciation shall be calculated at the rates as per the Annexure to these

Regulations.

iii. The residual value of assets shall be considered as 10% and depreciation shall

be allowed upto maximum of 90% of the estimated cost of the Asset.

iv. Land is not a depreciable asset and its cost shall be excluded from the capital

cost while computing 90% of the historical cost of the asset.

v. The historical cost of the asset shall include additional capitalisation.



June 2013

vi. Depreciation shall be chargeable from the first year of operation. In case of

operation of the asset for part of the year, depreciation shall be charged on

pro-rata basis.

vii. After the assets are fully depreciated the benefit of reduced tariff shall be

made available to the consumer.

3.135 Commission has calculated depreciation considering the revised opening GFA

without revaluation reserve, weighted average depreciation rates and deductions

submitted by TANGEDCO, and capitalization approved by the Commission in this

order. The GFA considered for estimation of depreciation is tabulated below:

Table 58: Opening GFA considered for the calculations of Depreciation (Rs. Cr)

Power Station As on Nov 2010 As on March 2011 As on March 2012

Ennore TPS 1,056.84 1,056.84 1,057.05

Tuticorin TPS 1,853.70 1,861.47 1,869.64

Mettur TPS 1,049.19 1,105.21 1,085.40

North Chennai TPS 1,987.19 1,989.05 2,013.71

Total Thermal 5,946.92 6,012.57 6,025.80


Kuttalam GTPS 351.05 351.05 365.84


Valuthur GTPS 540.82 540.82 551.84

Total Gas 1,891.63 1,894.04 1,923.64

Erode HEP - (incl.

Bhavani Barrage and

Bhavani Khattai)

695.51 696.07 697.66

Kadamparai HEP 363.48 363.51 365.97

Kundah HEP 953.74 955.88 956.37

Tirunelveli HEP (incl -

Periyar) 364.33 381.73 394.39

Total Hydro 2,377.07 2,397.19 2,414.41

Tirunelveli 206.45 206.45 206.45

Udumalpet 136.41 136.41 136.41

Total Wind 342.86 342.86 342.86

Total Generation 10,558.49 10,646.67 10,706.71

Total Distribution 7668.03 7941.09 8797.17

TANGEDCO 18,226.52 18,587.76 19,503.88



June 2013

3.136 Based on the above approach, Commission approves depreciation for all the

generating stations and distribution business except for wind stations. In the last tariff

order, Commission approved a transfer price of Rs. 2.75 per unit for own wind mills.

Hence, in this order Commission is not determining fixed expenses on account of the

own wind mills.

Table 59: Depreciation approved by the Commission (Rs. Cr)

Power Station

2010-11 FY 2011-12 FY 2012-13

Petition

Commissio

n

Petitio

n

Commissio

n Petition

Commissio

n

Ennore TPS 15.77 15.60 37.79 37.45 37.80 37.46

Tuticorin TPS 27.12 26.65 64.49 64.21 64.72 64.45

Mettur TPS 14.29 14.20 36.04 36.04 36.47 35.35


Total Thermal 82.96 82.12 199.98 199.36 202.66 199.76


Kuttalam GTPS 5.17 5.13 12.32 12.32 12.32 12.82


Valuthur GTPS 8.00 7.96 19.11 19.11 19.11 19.48

Total Gas 28.09 27.94 67.14 67.14 67.14 68.14

Erode HEP - (incl.

Bhavani Barrage and

Bhavani Khattai)

8.49 8.48 20.36 20.36 20.39 20.41

Kadamparai HEP 4.40 4.38 10.52 10.52 10.53 10.58

Kundah HEP 10.46 10.45 25.16 25.16 25.24 25.16


Periyar) 4.35 4.33 10.99 10.99 11.14 11.44

Total Hydro 27.70 27.64 67.03 67.03 67.30 67.59

Tirunelveli 0 0 0 0 0 0

Udumalpet 0 0 0 0 0 0

Total Wind 0 0 0 0 0 0



TANGEDCO 253.59 247.44 618.26 606.32 640.11 637.62

Interest on long term loans and other financing charges

3.137 In the last tariff order, Commission has approved the total interest expenses

corresponding to actual long term and short term loans borrowed by TANGEDCO.

For wind generating assets Commission in its last tariff order has not approved any

interest expenses as the loan borrowing, if any towards these assets would already be

over.The interest expenses approved in the last tariff order are tabulated below:



June 2013

Table 60: Interest expenses approved by the Commission in its last tariff order (Rs. Cr)

Stations

Commission

FY 11 FY 12 FY 13

ETPS 3 9 8

NCTPS 6 16 16

MTPS 3 9 9

TTPS 6 15 16

NCTPS II 0 0 174

MTPS II 0 0 293

Total Thermal 19 49 516

BBGTPS 2 4 4

Kuttalam 1 3 3

Kovilkalappal 1 4 4

Valuthur 2 7 7

Total Gas 6 18 18

Erode 2 5 9

Kadamparai 1 3 3

Kundah 3 8 8

Tirunelveli 1 3 4

Total Hydro 7 19 24

Total Generation 32 86 558

Distribution 688 3150 3355

TANGEDCO 720 3236 3913

3.138 In the current Petition, TANGEDCO has claimed the interest expenses corresponding

to only long term loans and separately claimed the interest on working capital as per

norms specified by TNERC in its Tariff Regulations 2005.

3.139 The opening balance of loans as on 1st November 2010 for TANGEDCO considered

in its Petition is based on the provisional transfer scheme notified as on 2nd January

2012. TANGEDCO in its Petition has submitted that the loan of a financial

institution is not linked with any particular generating plant or the CAPEX schemes as

erstwhile TNEB used to have a basket of loan which was used to meet the total capital

expenditure of erstwhile TNEB. Therefore it is difficult to identify the debt / interest

and equity of the generating plant or station wise or distribution function wise.

3.140 Hence TANGEDCO has adopted the following approach for segregation of interest to the generating plant / station and distribution function

i. Project specific loans for generation and distribution is initially

allotted to each of the respective project and considered as opening

loan balance for that particular project.



June 2013

ii. Large quantum of generic loans which cannot be differentiated into

project specific loans and interest paid on these loans is bifurcated as

per opening gross block of generation and distribution notified as per

transfer scheme.

3.141 Commission has observed discrepancies in the TANGEDCO’s submission of loan and

its bifurcation based on gross fixed assets. In response to Commission’s observation

TANGEDCO has revised the allocation of loans based on net fixed assets without

revaluation reserve and also segregated the long term loans borrowed for capital

projects, repayment of existing loans and funding the revenue expenditure. The

summary of revised submission of TANGEDCO is tabulated below:

Table 61: Revised interest expenses submitted by TANGEDCO (Rs. Cr)

Particulars 2010-11 2011-12 2012-13

Loan Profile

Op. Balance 15,065 19,412 29,594

Add: Addition for CAPEX 2,226 4,924 2,571

Add: Addition for Loan Repayment 1,754 4,921 7,621

Add: For Revenue Expenditure 2,374 5,876 6,305

Less: Loan Repayment 2,008 5,538 8,270

Closing Balance 19,412 29,594 37,821

Gross Interest Expenses 1155.66 3017.95 4268.91

IDC 282.43 664.19 1443.51

Net Interest Expenses 873.23 2353.76 2825.40

3.142 In its last order Commission has stated that there is a mix up between the capital

account and the revenue account. In the revised submission TANGEDCO has again

included the borrowings corresponding to revenue account in capital account. Based

on the revised submission Commission has made the following observations:

i. The average interest rate for FY 11 is higher than the rate at which the long

term loans are procured.

ii. The loan repayment submitted by TANGEDCO includes the repayment of

loans that have been borrowed for revenue expenditure during the control

period.

3.143 TANGEDCO has clarified that higher interest rate is due to the fact that the loans borrowed during the first seven months of FY 11 are not accounted in audited

accounts that were finalized based on provisional transfer scheme dated 2nd January

2012. However, debt obligations corresponding to those additional loans were met by

TANGEDCO and the impact to that extent has been included in its audited accounts.

3.144 Also, Commission is of the view that it needs to treat the capital account and revenue

account separately atleast since TANGEDCO started working independently. Based

on the above submissions, Commission for the determination of interest expenses on

long term loans has considered following assumptions:



June 2013

i. Revised opening loans as on 1st November 2010 has been arrived considering the

net addition during first seven months of FY 11 based on information provided by

TANGEDCO.

ii. The repayment of existing loans as per audited accounts also includes the

repayment of loans borrowed for revenue account. Commission is treating the

revenue account separately and also allowing the interest expenses on account of

regulatory asset approved in its last tariff order. Hence, allowing the borrowings

and interest expenses corresponding to the repayment of loans borrowed for

funding of revenue account will result in double accounting of the interest

expenses allowed for funding the revenue gap. In view of this, Commission is

accepting the opening loans as on 1st November 2010 and is assuming a

repayment period of 10 years.

iii. The repayment period of new loans borrowed during the control period is assumed

to be 10 years

iv. The borrowings required for loan repayment will be estimated after taking into

account the depreciation allowed during the year.

v. Loans required for the capital works will be arrived after considering the approved

capital expenditure and available grants and consumer contribution during the

control period. Equity required for funding the capital expenditure is assumed to

be nil as Commission is not allowing any return on equity.

vi. The consumer contribution and grants for FY 11 and FY 12 has been considered

as per audited accounts while for FY 13 they are approved based on historical

data.

vii. Interest expenses on account of capital works for wind assets has not been

considered as borrowings on account of wind assets cannot be loaded on tariff for

other generating stations and distribution business. Commission has already

approved generation cost for wind assets based on transfer price mechanism.

viii. Interest on cogeneration sugar mills is also not considered as the tariff for these

generating stations is taken as per Commission’s tariff order for procurement of

power from cogeneration.

ix. Average interest rate for FY 11 and FY 12 is estimated based on interest expenses

as per audited accounts and revised loan profile considering the borrowings during

the first seven months of FY 11. Interest rate for FY 13 is assumed as 11.98% i.e.

the average interest rate of FY 11 and FY 12.

x. Interest during construction (IDC) is approved based on capital works in progress.

3.145 The details of borrowings and interest expenses approved by the Commission

corresponding to capital expenditure and repayment of loans are given below.



June 2013

Table 62: Revised opening of loans as on Nov 2010 - (Rs. Cr.)

Particulars Amount

Opening of loans as on November 2010

– As per provisional transfer scheme 15064.97

Net additions in loans during the first

seven months of FY 11 3682.25

Revised opening loans as on 1st

November 2010. 18747.22

Table 63: Borrowings considered for funding capital expenditure (Rs. Cr)

Particulars 2010-11 2011-12 2012-13

Capital Expenditure 2,439.49 6,634.03 3,634.77

Less: Consumer Contribution 212.89 394.42 477.54

Less: Grants 0.00 312.62 104.94

Loans required for funding

capital expenditure 2,226.60 5,927.00 3,052.29

Table 64: Borrowings approved for repayment of loans (Rs. Cr)

Particulars 2010-11 2011-12 2012-13

Repayment of Existing

loans (Revised opening as

on Nov 2010)

781.13 1,874.72 1,874.72

Repayment of new loans 306.68 1140.13 1743.41

Less: Depreciation 247.44 606.32 637.62

Loans required for

repayment of loans 840.37 2,408.53 2,980.51

Table 65: Interest expenses approved by the Commission for the first control period (Rs. Cr)

Particulars 2010-11 2011-12 2012-13

Loan Profile

Op. Balance 18,747 20,598 25,824


Add: Addition for Loan Repayment 840 2,409 2,981


Closing Balance 20,726 26,046 28,461

Gross Interest Expenses 1,090.25 2,504.02 3,265.60

IDC 279.19 937.93 1,464.84

Net Interest Expenses 811.06 1,566.09 1,800.76



June 2013

3.146 Commission has allocated the opening loans as on November 2010 between

generating stations and distribution business based on net fixed assets and CWIP.

Later on the addition and repayment of loans allocation has been done based on

approach detailed above. The interest expenses approved by the Commission based on

loan allocation among generating stations and distribution is tabulated below:

Table 66: Approved interest expenses on long term loans for TANGEDCO during first control period

(Rs. Cr)

Power Station 2010-11 2011-12 2012-13


Ennore TPS 15.06 51.91 41.50 98.62 9.40 106.03

Tuticorin TPS 67.73 63.86 146.08 120.48 98.62 130.98

Mettur TPS 29.28 31.59 89.46 62.18 41.49 69.73


NCTPS Stage-II

- - -

MTPS Stage-III

-

- 20.72 -

Ennore Expansion

-

-

-

Total Coal 201.23 204.24 526.10 386.43 356.02 419.94


Kuttalam GTPS 21.39 19.22 57.51 37.14 49.52 49.18


Valuthur GTPS 34.72 40.60 93.38 93.72 85.37 107.47

Total Gas 111.55 92.84 302.92 192.89 261.01 222.19

Erode HEP - (incl.

Bhavani Barrage and

Bhavani Khattai)

31.73 39.52 80.03 75.13 160.05 83.86

Kadamparai HEP 5.40 17.34 17.42 32.98 27.21 35.82

Kundah HEP 7.50 60.22 46.01 115.65 64.56 126.75


Periyar) 17.00 22.57 41.68 44.62 85.17 51.04

Total Hydro 61.63 139.65 185.14 268.38 336.99 297.48

Total Generation 374.41 436.72 1,014.16 847.70 954.02 939.61

Distribution 499.13 374.34 1,396.07 718.40 1,592.00 861.15

TANGEDCO 873.54 811.06 2,410.23 1566.09 2,546.02 1800.76

3.147 TANGEDCO has claimed interest on consumer security deposit based on actual

consumer security deposits and average interest rate as per audited accounts. The

Commission has approved the interest expenses incurred on consumer security

deposits to the extent of working capital requirement determined by the Commission

in Table 72 based on the norms specified in the TNERC Tariff Regulation, 2005 for

distribution business. Based on audited accounts, Commission has considered the

average interest rate of 7.09% and 7.00% on consumer security deposits for FY 2010-

11 and FY 2011-12 respectively. For FY 2012-13, Commission has allowed interest

expenses at 9% in accordance to its order on interest on consumer security deposit

dated 5th February 2013.



June 2013

3.148 Commission has observed that TANGEDCO has claimed interest on GPF in other

finance charges. Commission is not allowing the interest expenses on GPF as it has

not considered GPF reserve for funding of capital expenditure. The interest expenses

on consumer security deposits and other finance charges approved by the Commission

are tabulated below.

Table 67: Interest and other finance charges approved by the Commission (Rs. Cr)

Parameter 2010-11 2011-12 2012-13


Interest on consumer

security Deposits 145.34 100.44 380.05 247.60 399.05 380.81

Other finance charges 48.78 20.23 140.56 87.14 147.58 87.14

Total 194.12 120.67 520.61 334.74 546.63 467.95

3.149 The overall interest and other finance charges approved by the Commission for the

distribution business during the first control period are given below.

Table 68: Interest and other finance charges approved for distribution business during the first control

period (Rs. Cr)

Parameter 2010-11 2011-12 2012-13


Interest on long term

loans 499.13 374.34 1396.07 718.40 1592.00 861.15




Total interest and

finance charges 693.25 495.00 1916.68 1053.14 2138.63 1329.10

Return on Equity

3.150 TANGEDCO in its Petition has claimed return on equity on total equity base as on 1st

November 2010 based on provisional transfer scheme. The equity base was bifurcated

among the generating stations and distribution business based on opening gross block

allocated to generating stations and distribution business of TANGEDCO. The return

on equity claimed by TANGEDCO in its Petition has been tabulated below:

Table 69: Return on equity filed by TANGEDCO for the first control period (Rs. Cr)

Power Station 2010-11 2011-12 2012-13

Ennore TPS 8.62 26.81 32.94

Tuticorin TPS 15.07 47.06 58.14

Mettur TPS 9.36 28.88 37.17


NCTPS Stage-II - - -

MTPS Stage-III - - 74.56



June 2013

Power Station 2010-11 2011-12 2012-13





Erode HEP 5.93 18.28 33.45


Kundah HEP 7.75 24.14 29.79


Generation 84.35 262.34 413.65

Distribution 64.91 236.12 331.27

TANGEDCO 149.26 498.46 744.92

3.151 Commission in its last tariff order has allowed the return on equity for generating

stations while disallowing the return on equity for distribution business. In addition

Commission’s views and observations while approving return on equity in its last

tariff order are given below:

i. There is a mix up between the capital account and revenue account and equity

as well as capital borrowings have been diverted to meet the revenue

expenses.

ii. The return on equity shall not be permitted if equity has been diverted for

meeting revenue expenses.

iii. Borrowings are more than the investment shown in capital expenditure which

brings out the fact that the borrowings have been diverted for revenue

expenditure.

iv. The Regulations of the Commission are for normal situations and does not

cover a situation which is encountered now. Therefore, the Commission has

to take a practical view on this issue. The option available to the Commission

is to disallow the interest costs on the entire borrowings in excess of capital

works and allow return on equity in line with the its tariff regulations.

v. However, if the Commission disallows the interest costs on the entire

borrowings in excess of capital works in line with the Regulation, it would

create confusion and may also affect the borrowing ability of the distribution

company and the transmission licensee.

vi. In view of the above submissions Commission has not allowed RoE while

allowing the interest expenses on total borrowings in its last order. This issue

was also dealt by the Hon’ble APTEL in Appeal No. 102. of 2012 filed by M/s

Beta Wind Farm (P) Ltd. The relevant extracts of the judgement is reproduced

below:



June 2013

“Even though we feel that the State Commission should have determined

interest on loan and Return on Equity as per the Regulations, in view of the

submissions made by the State Commission that allowing ROE and interest on

loan as per Regulations will only result in increase in ARR and tariff and that

the adjustment will be made after finalization of the balance sheet of the

successor companies of the Electricity Board viz. Respondent nos. 1 and 2 and

the proposed restructuring of loan, no purpose will be served by interfering

with the order of the State Commission.

In view of above, we do not want to interfere with the findings of the State

Commission regarding the treatment given to the interest on loan in the

impugned order.”

3.152 In order to understand the extent to which the long term loans and equity have been

diverted, Commission directed TANGEDCO to bifurcate the opening loans as on

November 2010 into loans borrowed for funding capital projects, repayment of

existing loans and funding the revenue expenditure. However, TANGEDCO has

replied stating that it is not possible to segregate the long term loans into the heads

suggested by the Commission. In the absence of information from TANGEDCO,

Commission undertook an exercise to understand the level of diversion of capital

funds.

3.153 Based on TNEB and TANGEDCO audited accounts from FY 03, Commission has

estimated the excess funds available with utility for funding capital expenditure and

whether there was any equity requirement for funding the capital expenditure.

3.154 The Commission has tabulated below the excess funds with utility in the past years

based on additions to equity, consumer contribution, long term loans and actual

capital expenditure.

Table 70: Comparison of source of funds and actual capital expenditure (Rs. Cr)

Year

Capital

Expenditure

Source of funding Excess

Funds Consumer

Contribution and

grants Equity

Long term

loans Total

FY 2003 1236 279 25 1621 1925 689

FY 2004 1561 408 200 2761 3369 1808

FY 2005 1272 391 85 2043 2519 1246

FY 2006 1570 428 25 2134 2587 1018

FY 2007 2094 319 175 3075 3569 1475

FY 2008 2333 527 490 4836 5853 3519

FY 2009 2706 436 1171 8552 10158 7452

FY 2010 4182 632 100 9953 10686 6504



June 2013

3.155 From the above table, it can be observed that source of funds for capital assets are

higher than actually required for funding the capital expenditure. In addition the fact

that the excess funds available during the year are more than the equity infused that

year clearly indicates that equity has not contributed in the creation of capital assets

and has been diverted towards revenue account since FY 2003.

3.156 Commission has not considered the equity requirement while approving the funding

requirement of capital expenditure during the first control period. This stand was

taken because Commission is of the view that TANGEDCO is mixing the revenue

account with capital account and the equity approved may be again diverted to

revenue account. This can also be observed from TANGEDCO audited accounts

wherein the actual borrowings for FY 11 and FY 12 are significantly higher than

capital expenditure. TNERC Tariff Regulations also allow the Commission for

approving the equity below the norms of 30% requirement. The relevant extracts of

the regulation are reproduced below:

“21. Debt-Equity Ratio

For the purpose of determination of tariff, debt-equity ratio as on the date of commercial

operation of Generating Station and transmission projects, sub-station, distribution lines or

capacity expanded after the notification of these Regulations shall be 70:30. Where equity

employed is more than 30% the amount of equity shall be limited to 30% and the balance

amount shall be considered as loans, advanced at the weighted average rate of interest and

for weighted average tenor of the long term debt component of the investment”

“Provided that in case of a Generating Company or other licensees, where actual equity

employed is less than 30%, the actual debt and equity shall be considered for determination

of return on equity in tariff computation.”

3.157 Based on the above submissions, Commission is not allowing return on equity for

TANGEDCO during the control period due to following reasons:

i. Commission has approved interest on total outstanding loans as on November

2010

ii. Based on available sources of funding, equity has been diverted towards

revenue account from FY 2003 and hence the addition in equity base as per

audited accounts is on account of funding the revenue expenditure and not for

creation of capital assets.

iii. Loans approved for funding the capital expenditure for generating stations and

distribution business during the control period are without considering the

equity

Interest on Working Capital

3.158 TANGEDCO has claimed interest on working capital for its generating stations and

distribution based on norms specified in the TNERC Tariff Regulations, 2005.



June 2013

3.159 Commission has not approved the interest on working capital in its last order as it has

approved interest expenses corresponding to total loans including short term

borrowings. However TANGEDCO has claimed interest expenses for short term

borrowings separately and claimed interest on working capital. Commission is of the

view that it is appropriate to approve and segregate the loans based on purpose and in

accordance with its Tariff Regulations. Hence, Commission approves the interest

expenses based on its Tariff Regulations and relevant guidelines are reproduced

below:

“26. Working Capital

(2) Till such a formula is evolved, the norms for Working Capital shall be as below:

(a) For Coal based / Lignite fired Generating Stations

(i) Cost of coal or lignite for one and half month for pit head

generating stations and two months for non pit head generating stations

corresponding to the target availability;

(ii) Cost of secondary fuel oil for two months corresponding to the

target availability;

(iii) Operation and Maintenance expenses for one month;

(iv) Maintenance spares @ 1% of the historical cost escalated @ 6%

per annum from the date of commercial operation; and

(v) Receivables equivalent to two months of fixed and variable charges for

sale of electricity calculated on .target availability.

(b) For Gas Turbine / combined cycle Generating Stations

(i) Fuel cost for one month corresponding to the target availability duly

taking into account the mode of operation of the Generating Station on gas

fuel and liquid fuel;

(ii) Liquid fuel stock for half month;


(iv)Maintenance spares @ 1% of the historical cost escalated @ 6% per

annum from the date of commercial operation; and

(v) Receivables equivalent to two months of fixed and variable charges

for sale of electricity calculated on target availability.

(c) For Hydro Power Generating Stations

The working Capital shall cover:

(i) Operation and Maintenance expenses for one month;

(ii) Maintenance spares @ 1% of the historical cost escalated @ 6%


(iii) Receivables equivalent to two months of fixed charges for sale of

electricity, calculated on normative capacity index.

(e) For Distribution System

(i) Operation and Maintenance expenses for one month

(ii) Maintenance spares for two months based on annual requirement

considered at 1% of the gross fixed cost at the beginning of the year.

(iii) Receivable equivalent to sixty day consumption charges.



June 2013

27. Interest on Working Capital

The short term rate of interest on working capital shall be on normative basis and

shall be equivalent to the primary lending rate of State Bank of India as on 1st

April of the relevant year.”

3.160 Commission has observed that TANGEDCO has estimated the working capital

requirement for generating stations based on norms specified by Commission.

However, Commission has re-estimated the interest on working capital for generating

stations considering the variable costs and fixed costs approved in this Order and

interest rates as submitted by TANGEDCO.

3.161 Commission has considered the interest rates as submitted by TANGEDCO as they

were in accordance with the Regulations. The interest on working capital approved by

the Commission for generating stations during the first control period is tabulated

below.

Table 71: Interest on working capital approved by the Commission during the control period (Rs. Cr)

Power Station FY 2010-11 FY 2011-12 FY 2012-13


Ennore TPS 10.67 10.73 21.6 18.83 25.62 20.31

Tuticorin TPS 37.9 32.49 124.4 115.83 123.43 129.86

Mettur TPS 30 29.45 99.96 97.84 91.73 97.10


NCTPS Stage-II -

-

-

MTPS Stage-III -

-

12.53


Kuttalam GTPS 1 0.71 4.83 4.20 3.52 2.83


Valuthur GTPS 2.15 2.92 8.63 8.68 14.61 10.48

Erode HEP - (incl.

Bhavani Barrage

and Bhavani

Khattai)

1.62 1.67 4.49 4.00 8.44 5.01

Kadamparai HEP 0.77 0.89 2.07 2.10 2.74 2.54

Kundah HEP 1.48 2.37 4.66 5.76 6.07 6.95

Tirunelveli HEP

(incl - Periyar) 0.99 1.01 2.76 2.48 4.72 3.10


3.162 For distribution business, TANGEDCO has claimed the working capital requirement

based on norms approved by the Commission except for maintenance spares. The

working capital requirement for maintenance spares has been claimed at 1% of GFA

instead of two months of the annual requirement as per Regulations. Also,

TANGEDCO has not taken into account the consumer security deposits for arriving at

the working capital requirement.



June 2013

3.163 Commission has approved the interest on consumer security deposit under interest on

loans and hence Commission is of the view that interest on working capital for

distribution business can only be allowed on working capital requirement above the

consumer security deposits.

3.164 Consumer security deposits upto FY 2011-12 are taken as per audited accounts and

for FY 2012-13 they are projected based on historical trend in increase of consumer

security deposit. The working capital requirement and available consumer security

deposit for the control period is tabulated below.

Table 72: Approved working capital requirement and available consumer security deposits during the

control period (Rs. Cr)


Working Capital requirement 3,400.81 3,536.39 4,231.27

Average available consumer security

deposits 4,921.09 5,335.35 5,842.57

3.165 From the above table it can be observed that available consumer security deposits are

more than the working capital requirement. In view of this Commission is not

approving any interest on working capital as it has already approved interest on

consumer security deposits to the extent of working capital requirement under interest

and finance charges.

Table 73: Interest on working capital approved during the control period (Rs. Cr)



Distribution 164.38 0.00 465.91 0.00 700.88 0.00

Other Debits

3.166 TANGEDCO in its Petition has included the other fuel costs, lubricants and consumable and water costs in other debits for generating stations. In response to

Commissions query regarding this discrepancy, TANGEDCO has made the following

submissions

i. Cost of water, other fuel costs and lubricants and consumables are

part of operating expenses of power stations of TANGEDCO and

these expenses were not claimed under fuel expenses or repairs and

maintenance expenses, and therefore have been included in other

debits. TANGEDCO requested the Commission to allow these

expenses as they are operating expenses for generation of power.

ii. The cost of Rs. 68.17 Crs and Rs. 20.60 Crs towards other debits for

Kuttalam GTPS and VGTPS is due to minimum guarantee off take of

natural gas and transmission charges for supply of gas. TANGEDCO

confirmed that these expenses were not claimed in the fuel costs as a

part of variable costs.



June 2013

3.167 However, Commission is not considering the submission of TANGEDCO due to

following reasons:

i. Commission is of the view that though TANGEDCO has not included

the operating expenses claimed in other debits in its O&M expenses,

these expenses cannot be allowed as Commission has already approved

the O&M expenses, which are controllable expenses, in its last order in

accordance to its Regulations. Hence, approving additional operating

expenses under other debits is not appropriate and the increased

expenses on account of controllable parameters will be inaptly passed

on to the consumers.

ii. Based on the prior period expenses submitted by TANGEDCO,

Commission has observed that minimum guarantee charges were

reversed and has been accounted as prior period income in FY 12.

Hence, Commission is not allowing the expenses due to minimum

guarantee off take charges in other debits.

3.168 Based on above submissions, Commission has considered other debits for generating

stations as approved in last order and has not allowed increase in other debits due to

minimum guarantee off take of natural gas and other operational charges. The

approved other debits in this order by the Commission is tabulated below.

Table 74: Other debits approved by the Commission for generating stations (Rs. Cr)

Power Station

FY 2010-11 FY 2011-12 FY 2012-13

Last

Order Petition Comm.

Last


Last


Ennore TPS 0.08 3.90 0.08 0.20 11.65 0.20 0.20 12.11 0.20

Tuticorin TPS 0.13 1.61 0.13 0.30 7.11 0.30 0.30 7.40 0.30

Mettur TPS 0.08 3.58 0.08 0.20 1.57 0.20 0.20 1.63 0.20

North Chennai TPS 0.13 9.17 0.13 0.40 24.16 0.40 0.40 25.12 0.40

Tirumakottai

GTPS 0.04 0.44 0.04 0.10 0.47 0.10 0.10 0.49 0.10

Kuttalam GTPS 0.03 68.21 0.03 0.06 0.13 0.06 0.06 0.13 0.06

Basin Bridge

GTPS 0.04 0.01 0.04 0.10 0.05 0.10 0.10 0.05 0.10

Valuthur GTPS 0.04 20.60 0.04 0.20 0.00 0.20 0.20 0.00 0.20

Erode HEP - (incl.

Bhavani Barrage

and Bhavani

Khattai)

0.05 0.04 0.05 0.12 0.10 0.12 0.12 0.10 0.12

Kadamparai HEP 0.04 (0.06) 0.04 0.10 0.00 0.10 0.10 0.00 0.10

Kundah HEP 0.08 0.06 0.08 0.20 0.15 0.20 0.20 0.16 0.20

Tirunelveli HEP

(incl - Periyar) 0.04 0.95 0.04 0.10 2.84 0.10 0.10 2.95 0.10

Total Generation 0.78 108.50 0.78 2.08 48.23 2.08 2.08 50.15 2.08



June 2013

3.169 For distribution business, TANGEDCO has included extraordinary debits and DSM

under other debits. However TANGEDCO in its Petition has not provided any

adequate information pertaining to these expenses.

3.170 On review of audited accounts it was observed that there was extraordinary credit corresponding to extraordinary debits and TANGEDCO has claimed the expenses

under other debits without considering this credit. Hence, Commission is not allowing

this expense in other debits and directs TANGEDCO to reconcile expenses pertaining

to extraordinary items appropriately.

3.171 For DSM, TANGEDCO has claimed Rs. 10 Cr in FY 2012-13 as expense under other

debits. Commission is approving expenses for DSM under separate head and it is

inappropriate to include the expenses on this account in other debits. Also,

TANGEDCO has not provided any information regarding DSM measures taken by it

and how this provision of Rs. 10 Cr was utilized and further keeping in view that FY

2012-13 is already over, Commission is not allowing any DSM expenses.

3.172 Based on the above submissions, the other debits approved by the Commission are

tabulated below.

Table 75: Other Debits approved by the Commission (Rs. Cr)


Last


Last


Last


Distribution 11.68 10.76 10.76 28.57 37.97 14.26 29.14 26.90 16.90

Prior Period Expenses

3.173 TANGEDCO in its Petition has claimed for net prior period expenses of Rs. 1052 Crs

in FY 12. TANGEDCO has further submitted that these expenses pertaining to prior

period for power purchase, revision in tariff payments and fuel price adjustment to

central generating stations, employee cost, interest and finance charges and other

charges.

3.174 However on review of audited accounts for FY 12, it was observed that net prior period expenses were only Rs. 576.81 Crs. In response to data gaps, TANGEDCO has

revised the prior period expenses as per audited accounts and submitted the detailed

break-up for Rs. 576.81 Crs.

3.175 In the last order Commission has not allowed any prior period expenses as these were

charges corresponding prior to functioning of TANGEDCO and was of the opinion

prior period charges should be addressed in the financial restructuring plan by

TANGEDCO.



June 2013

3.176 On review of prior period expenses data submitted by TANGEDCO and during the

discussions with TANGEDCO officials it was inferred that entire net prior period

expenses was due to expenses corresponding prior to FY 11. Hence in this order

Commission is truing up the expenses after formation of TANGEDCO, and is not

allowing the net prior period expenses that have been sought by TANGEDCO.

Demand Side Management

3.177 The Commission in its last tariff order has provisionally allowed Rs.10 Crores in the

ARR for the purpose of carrying out the activities of Energy Conservation and

Demand Side Management (DSM) in FY 13.

3.178 TANGEDCO in its Petition has claimed expenses towards DSM during FY 13 under

other debits. However, it has not provided any justification or details of DSM

measures carried out due to which it has incurred Rs. 10 Cr of expenditure. Hence,

Commission is not allowing the DSM expenses of Rs. 10 Cr in FY 13

Contribution for Contingency reserves

3.179 TANGEDCO has claimed contingency reserve at 0.25% of GFA in FY 13 in

accordance to TNERC MYT Regulations.

“Regulation 35 of the MYT Regulations 2009,

To meet out any contingent liability or unforeseen revenue losses, the Distribution licensees

shall maintain a contingency reserve. The Distribution Licensees shall estimate the

contingency reserve on the value of Assets for each year of the control period.

Regulation 31 of the Tariff Regulations 2005,

The Generating Companies and the licensees shall provide and maintain a

contingency reserve upto 0.5% of the value of assets at the beginning of the year and

the provision made for the year will be allowed in their Revenue Requirement. This

reserve will be utilised to meet any contingent liability or unforeseen revenue losses.”

3.180 It is pertinent to mention that provision for contingency reserve is appropriate when

utility is in revenue surplus and some portion of this surplus revenue can be

contributed for contingency reserve. However, in the current petition, TANGEDCO

has shown a revenue gap of Rs. 9719 Crs in FY 13 and in this situation it is inapt to

allow the expenses on account of contingency reserve. Hence, Commission disallows

the contingency reserve as claimed by TANGEDCO.



June 2013

Summary of fixed Cost approved for Distribution function

3.181 Based on above submissions, the summary of fixed cost approved for distribution

function is tabulated below:

Table 76: Summary of fixed costs for Distribution business approved by the Commission for the first


Last Tariff Order Petition Commission

Particulars FY 11 FY 12 FY 13 FY 11 FY 12 FY 13 FY 11 FY 12 FY 13

Operation and

Maintenance Expenses 1093 2728 2837 1388 3652 3691 1282 3327 3477

Depreciation 95 254 287 115 284 303 110 273 302

Interest and other

finance charges 688 3150 3355 693 1917 2139 495 1053 1329

Other Debits 12 29 29 11 38 27 11 14 17

Prior Period

Debit/(Credit) Charges 0 0 0 0 1052 0 0 0 0

Reasonable Return /

Return on Equity 0 0 0 65 236 331 0 0 0

Interest on Working

Capital 0 0 0 164 466 701 0 0 0

Demand side

management 0 0 10

0 0 0

Contribution for

contingency reserve 0 0 0 0 0 72 0 0 0

Total 1888 6161 6518 2436 7645 7263 1898 4667 5125

Expenses on account of Generation

3.182 In this Section, the Commission in accordance with TNERC (Terms and Conditions

for determination of Tariff) Regulations, 2005 has analysed the expenses on account

of Generation business of TANGEDCO from FY 2010-11 to FY 2012-13 and with

reference to the Tariff Order dated March 31, 2012.

3.183 In respect of components of Tariff for Generating Stations, Regulation-36 of TNERC

Tariff Regulations, 2005 states as under:

“36. Components of Tariff

1. The tariff for sale of power by the Generating Companies shall be of two part namely

the Fixed Charges (recovery of annual capacity charges) and variable (energy)

charges.

2. The Fixed (annual capacity) charges shall consist of the following elements:

a) Interest on Loan Capital;

b) Depreciation

c) Return on Equity;

d) Operation and Maintenance expenses; and



June 2013

e) Interest on Working Capital:

3. The energy (variable) charges shall cover fuel cost.”

3.184 Commission in accordance with its regulations is approving the capacity charges and

variable cost on account of own generating stations and approach for the same is

detailed below.

Capacity charges for own generating stations

3.185 In above sections, Commission has approved the fixed expenses with respect to

generating stations for the first control period.

a) O&M expenses – Refer to Table 52, Table 53 and Table 54

b) Depreciation – Refer to Table 59

c) Interest on long term loans – Refer to Table 66

d) Return on Equity – Refer to Point 3.157

e) Interest on Working Capital – Refer to Table 71

f) Other Debits – Refer to Table 74

3.186 With respect to other income, Commission has observed that though TANGEDCO

has changed the approach regarding sharing of other income between generating

stations and distribution business, the total other income proposed by TANGEDCO is

in accordance with audited accounts. Hence, Commission is accepting the other

income as proposed by TANGEDCO in its Petition for generating stations.

3.187 For new thermal stations, Commission is not approving any fixed cost for the first

control period as none of the new thermal stations have been commissioned in the

first control period. For new hydro stations, TANGEDCO has included their fixed

costs in the fixed costs of respective hydro generating circles and hence Commission

is not separately approving the fixed costs for new hydro stations.

3.188 Based on above submissions, the summary of fixed expenses for own generating

stations as proposed by TANGEDCO and approved by the Commission in this order

for the first control period are tabulated below.



June 2013

ETPS

Table 77: Fixed charges approved for ETPS (Rs. Cr)

Parameter

Last Order Petition Commission

FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

Depreciation 25.42 61.00 61.00 15.77 37.79 37.80 15.60 37.45 37.46

Interest on Loan

Capital 3.33 9.00 8.00 15.06 41.50 9.40 51.91 98.62 106.03

Return on Equity 6.67 22.00 29.00 8.62 26.81 32.94 0.00 0.00 0.00

Operation and

maintenance exp 39.63 98.91 102.86 40.73 109.34 120.48 42.05 104.72 110.28

Interest on Working

Capital 0.00 0.00 0.00 10.67 21.60 25.62 10.73 18.83 20.31

Other Debit 0.08 0.20 0.20 3.90 11.65 12.11 0.08 0.20 0.20

Net Prior Period

Expenses 0.00 0.00 0.00 0.00 -0.03 0.00 0.00 0.00 0.00

Less: other income 1.71 6.00 6.00 9.88 26.37 27.42 9.88 26.37 27.42

Total 73.42 185.11 195.06 84.87 222.29 210.93 110.49 233.44 246.86

TTPS

Table 78: Fixed charges approved for TTPS (Rs. Cr)

Parameter


FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

Depreciation 22.08 54.00 56.00 27.12 64.49 64.72 26.65 64.21 64.45

Interest on Loan

Capital 5.83 15.00 16.00 67.73 146.08 98.62 63.86 120.48 130.98

Return on Equity 12.50 39.00 53.00 15.07 47.06 58.14 0.00 0.00 0.00

Operation and

maintenance exp 44.70 111.57 116.03 60.92 190.72 208.29 56.51 142.19 154.00

Interest on Working

Capital 0.00 0.00 0.00 37.90 124.40 123.43 32.49 115.83 129.86

Other Debit 0.13 0.30 0.30 1.61 7.11 7.40 0.13 0.30 0.30

Net Prior Period

Expenses 0.00 0.00 0.00 0.00 0.04 0.00 0.00 0.00 0.00


Total 77.41 205.97 227.43 188.42 538.27 517.30 157.70 401.38 436.30



June 2013

MTPS

Table 79: Fixed charges approved for MTPS (Rs. Cr)

Parameter


FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

Depreciation 15.83 40.00 40.00 14.29 36.04 36.47 14.20 36.04 35.35

Interest on Loan

Capital 3.33 9.00 9.00 29.28 89.46 41.49 31.59 62.18 69.73

Return on Equity 6.67 22.00 29.00 9.36 28.88 37.17 0.00 0.00 0.00

Operation and

maintenance exp 34.51 86.13 89.57 48.08 102.59 115.05 47.84 116.60 126.82

Interest on Working

Capital 0.00 0.00 0.00 30.00 99.96 91.73 29.45 97.84 97.10

Other Debit 0.08 0.20 0.20 3.58 1.57 1.63 0.08 0.20 0.20

Net Prior Period

Expenses 0.00 0.00 0.00 0.00 3.08 0.00 0.00 0.00 0.00


Total 51.34 143.23 153.67 117.43 321.51 281.88 106.00 272.80 287.54

NCTPS

Table 80: Fixed charges approved for NCTPS (Rs. Cr)

Parameter


FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

Depreciation 25.42 63.00 64.00 25.77 61.66 63.67 25.67 61.66 62.50

Interest on Loan

Capital 6.25 16.00 16.00 89.16 249.07 185.79 56.88 105.15 113.20

Return on Equity 13.33 42.00 56.00 16.66 51.52 63.98 0.00 0.00 0.00

Operation and

maintenance exp 50.58 126.24 131.29 46.72 116.00 128.37 50.22 117.65 129.25

Interest on Working

Capital 0.00 0.00 0.00 18.59 52.58 63.70 19.73 54.89 73.63

Other Debit 0.13 0.40 0.40 9.17 24.16 25.12 0.13 0.40 0.40

Net Prior Period

Expenses 0.00 0.00 0.00 0.00 -0.65 0.00 0.00 0.00 0.00


Total 89.79 236.94 256.99 196.30 534.74 510.23 142.86 320.13 358.57



June 2013

TKGTPS

Table 81: Fixed charges approved for TKGTPS (Rs. Cr)

Parameter


FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

Depreciation 8.33 21.00 21.00 6.66 15.90 15.90 6.62 15.90 16.03

Interest on Loan

Capital 1.25 4.00 4.00 27.86 74.73 64.17 22.67 43.34 47.00

Return on Equity 2.92 9.00 13.00 3.69 11.47 14.09 0.00 0.00 0.00

Operation and

maintenance exp 3.10 7.74 8.05 2.73 10.06 10.95 2.82 7.91 8.50

Interest on Working

Capital 0.00 0.00 0.00 1.35 7.16 8.34 2.72 6.75 6.78

Other Debit 0.04 0.10 0.10 0.44 0.47 0.49 0.04 0.10 0.10

Net Prior Period

Expenses 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00


Total 15.64 41.74 46.05 42.70 118.25 112.33 34.86 72.46 76.81

KGTPS

Table 82: Fixed charges approved for KGTPS (Rs. Cr)

Parameter


FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

Depreciation 6.67 16.00 17.00 5.17 12.32 12.32 5.13 12.32 12.82

Interest on Loan

Capital 1.25 3.00 3.00 21.39 57.51 49.52 19.22 37.14 49.18

Return on Equity 2.50 7.00 10.00 2.83 8.84 11.19 0.00 0.00 0.00

Operation and

maintenance exp 8.61 17.04 17.72 0.82 7.14 7.78 1.52 9.82 9.30

Interest on Working

Capital 0.00 0.00 0.00 1.00 4.83 3.52 0.71 4.20 2.83

Other Debit 0.03 0.06 0.06 68.21 0.13 0.13 0.03 0.06 0.06

Net Prior Period

Expenses 0.00 0.00 0.00 0.00 0.01 0.00 0.00 0.00 0.00


Total 19.05 43.09 47.77 99.41 90.77 84.45 26.59 63.53 74.17



June 2013

BBGTPS

Table 83: Fixed charges approved for BBGTPS (Rs. Cr)

Parameter


FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

Depreciation 12.50 30.00 30.00 8.26 19.81 19.81 8.22 19.81 19.81

Interest on Loan

Capital 1.67 4.00 4.00 27.59 77.30 61.94 10.35 18.69 18.54

Return on Equity 3.75 11.00 15.00 4.42 13.80 17.01 0.00 0.00 0.00

Operation and

maintenance exp 2.49 6.22 6.47 2.72 5.69 6.32 2.34 5.92 6.38

Interest on Working

Capital 0.00 0.00 0.00 3.06 5.06 3.92 1.78 3.41 2.06

Other Debit 0.04 0.10 0.10 0.01 0.05 0.05 0.04 0.10 0.10

Net Prior Period

Expenses 0.00 0.00 0.00 0.00 0.01 0.00 0.00 0.00 0.00


Total 20.45 51.22 55.67 45.93 121.54 108.86 22.61 47.74 46.69

VGTPS

Table 84: Fixed charges approved for VGTPS (Rs. Cr)

Parameter


FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

Depreciation 11.25 43.00 46.00 8.00 19.11 19.11 7.96 19.11 19.48

Interest on Loan

Capital 1.67 7.00 7.00 34.72 93.38 85.37 40.60 93.72 107.47

Return on Equity 3.75 15.00 24.00 4.60 14.18 17.32 0.00 0.00 0.00

Operation and

maintenance exp 3.45 8.62 8.96 21.06 7.95 8.88 5.48 14.04 15.07

Interest on Working

Capital 0.00 0.00 0.00 2.15 8.63 14.61 2.92 8.68 10.48

Other Debit 0.04 0.20 0.20 20.60 0.00 0.00 0.04 0.20 0.20

Net Prior Period

Expenses 0.00 0.00 0.00 0.00 0.04 0.00 0.00 0.00 0.00


Total 20.12 73.72 86.06 91.12 143.25 145.25 56.99 135.71 152.65



June 2013


Table 85: Fixed charges approved for Erode Hydro Generation Circle (Rs. Cr)

Parameter


FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

Depreciation 5.83 14.00 25.00 8.49 20.36 20.39 8.48 20.36 20.41

Interest on Loan

Capital 2.08 5.00 9.00 31.73 80.03 160.05 39.52 75.13 83.86

Return on Equity 4.58 14.00 26.00 5.93 18.28 33.45 0.00 0.00 0.00

Operation and

maintenance exp 14.34 35.79 37.22 11.10 26.52 29.83 12.14 28.87 35.07

Interest on Working

Capital 0.00 0.00 0.00 1.62 4.49 8.44 1.67 4.00 5.01

Other Debit 0.05 0.12 0.12 0.04 0.10 0.10 0.05 0.12 0.12

Net Prior Period

Expenses 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00


Total 26.85 68.49 96.92 58.71 149.53 251.99 61.63 128.23 144.21

Kadamparai Hydro Generation Circle

Table 86: Fixed charges approved for Kadamparai Hydro Generation Circle (Rs. Cr)

Parameter


FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

Depreciation 3.75 9.00 10.00 4.40 10.52 10.53 4.38 10.52 10.58

Interest on Loan

Capital 1.25 3.00 3.00 5.40 17.42 27.21 17.34 32.98 35.82

Return on Equity 2.50 7.00 10.00 2.94 9.16 11.27 0.00 0.00 0.00

Operation and

maintenance exp 8.03 20.03 20.83 10.88 22.05 24.32 9.26 19.82 21.72

Interest on Working

Capital 0.00 0.00 0.00 0.77 2.07 2.74 0.89 2.10 2.54

Other Debit 0.04 0.10 0.10 -0.06 0.00 0.00 0.04 0.10 0.10

Net Prior Period

Expenses 0.00 0.00 0.00 0.00 -1.70 0.00 0.00 0.00 0.00


Total 15.48 38.83 43.63 24.24 59.21 75.75 31.84 65.22 70.44



June 2013


Table 87: Fixed charges approved for Kundah Hydro Generation Circle (Rs. Cr)

Parameter


FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

Depreciation 9.17 22.00 23.00 10.46 25.16 25.24 10.45 25.16 25.16

Interest on Loan

Capital 2.92 8.00 8.00 7.50 46.01 64.56 60.22 115.65 126.75

Return on Equity 6.25 20.00 26.00 7.75 24.14 29.79 0.00 0.00 0.00

Operation and

maintenance exp 16.13 37.34 38.83 15.18 35.91 39.86 16.70 41.88 44.93

Interest on Working

Capital 0.00 0.00 0.00 1.48 4.66 6.07 2.37 5.76 6.95

Other Debit 0.08 0.20 0.20 0.06 0.15 0.16 0.08 0.20 0.20

Net Prior Period

Expenses 0.00 0.00 0.00 0.00 0.17 0.00 0.00 0.00 0.00


Total 34.21 86.54 95.03 41.60 135.12 164.56 89.00 187.57 202.86

Tirunelvelli Hydro Generation Circle

Table 88: Fixed charges approved for Tirunelvelli Hydro Generation Circle (Rs. Cr)

Parameter


FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

Depreciation 2.92 9.00 10.00 4.35 10.99 11.14 4.33 10.99 11.44

Interest on Loan

Capital 0.83 3.00 4.00 17.00 41.68 85.17 22.57 44.62 51.04

Return on Equity 2.08 8.00 12.00 2.49 8.18 12.74 0.00 0.00 0.00

Operation and

maintenance exp 9.70 24.22 25.19 9.66 24.19 27.50 9.92 24.76 27.16

Interest on Working

Capital 0.00 0.00 0.00 0.99 2.76 4.72 1.01 2.48 3.10

Other Debit 0.04 0.10 0.10 0.95 2.84 2.95 0.04 0.10 0.10

Net Prior Period

Expenses 0.00 0.00 0.00 0.00 1.00 0.00 0.00 0.00 0.00


Total 15.08 42.62 49.59 34.86 87.84 140.28 37.28 79.15 88.90

3.189 The recovery of capacity charges are governed by Regulation-42 of TNERC Tariff Regulations, 2005 which states as under:

“42. Recovery of Capacity Charges

1. Full capacity charges (Fixed Charges) shall be recoverable at target availability

specified in clause (1) of Regulation 37.



June 2013

2. Recovery of capacity charges below the level of target availability will be on pro rata

basis. At zero availability, no capacity charges shall be payable.…”

3.190 The above capacity charges as determined by the Commission are to be recovered

when TANGEDCO is able to meet the target in terms of norms set by the

Commission. The norms specified for recovery of fixed charges as per TNERC

regulation are stipulated below:

“37. Norms of Operation

The norms of operation for the Thermal Generating Stations shall be as

under:

(i) Target availability for recovery of full capacity (fixed) charges

(a) All Thermal Generating stations in Tamil Nadu except Ennore

Thermal Power Generating Station 80%

(b) Ennore Thermal Power Generating Station 50% (Till Renovation

and Modernization works in all units are completed)

.........”

3.191 Commission is of the view that there cannot be marked differences in plant

availability factor and plant load factor for own generation stations except for

BBGTPS due to following reasons:

a) Commission in its last order has not considered power generation from own

stations under merit order dispatch.

b) Due to prevailing power-deficit in the state, it is unlikely that SLDC may ask the

own generating stations to back down.

c) Also, TANGEDCO has not submitted any data regarding the backing down of

own generating stations.

3.192 Commission is allowing fixed charges for own generating stations on pro-rata basis

with respect to actual PLFs achieved. Based on the performance of the generating

stations it has been observed that all the gas based stations have not met the

performance targets while ETPS, TTPS (for FY 2010-11) were the coal based stations

that did not meet the targets set.

3.193 The Commission is of the view that as all these Stations fall outside the merit order

despatch, the non-availability of these Power Stations leads to costly power purchase

from other sources which gets reflected in power purchase cost in the ARR. Hence,

Commission is adopting the similar approach as adopted in the last tariff order and is

allowing the capacity charges only to the extent of actual performance of the

generating stations. The actual PLFs achieved and allowable capacity charges for the

control period are tabulated below:



June 2013

Table 89: Targets availability and actual PLF achieved by own generating stations

Name of the Power Station Targets FY 2010-11 FY 2011-12 FY 2012-13

Ennore TPS 50.00% 36.76% 22.61% 18.66%

Tuticorin TPS 80.00% 75.88% 85.57% 90.08%

Mettur TPS 80.00% 86.06% 92.77% 84.26%

North Chennai TPS 80.00% 89.61% 84.81% 91.66%

Tirumakottai GTPS 80.00% 74.45% 74.48% 76.78%

Kuttalum GTPS 80.00% 0.00% 46.58% 6.21%

Valathur - GTPS 80.00% 47.24% 67.16% 57.19%

Table 90: Allowable capacity charges for the first control period (Rs. Cr)

Name of the Power

Station

Approved Capacity Charges Allowable Capacity Charges

FY 2010-11 FY 2011-12 FY 2012-13 FY 2010-11 FY 2011-12 FY 2012-13

Ennore TPS 110.49 233.44 246.86 81.24 105.56 92.14

Tuticorin TPS 157.70 401.38 436.30 149.58 401.38 436.30

Mettur TPS 106.00 272.80 287.54 106.00 272.80 287.54



Kuttalum GTPS 26.59 63.53 74.17 0.00 36.99 5.76


Valathur - GTPS 56.99 135.71 152.65 33.65 113.92 109.13

Total 658.10 1547.19 1679.59 568.39 1365.98 1409.84

Variable cost for own generating stations

3.194 The Commission has worked out the variable cost for various generating stations on

the basis of data submitted in the petition and the subsequent submission of

TANGEDCO vide replies to the data gaps raised by the Commission. The variable

cost as determined by the Commission in respect of various generating stations of

TANGEDCO is detailed as under:

Coal based generating stations

3.195 As per Regulation 43 (ii) of the Tarff Regulation, the Energy (Variable) charges shall be worked out on the basis of ex-bus energy delivered / sent out from the generating

station. Rate of energy charges is based on the following elements:

a) Price of primary fuel

b) Quantum of primary fuel (coal) in kg required for generation of one kWh of

electricity at generator terminals, which shall be computed on the basis of Gross

Station Heat Rate (less heat contributed by secondary fuel oil) and gross calorific

value of coal.

c) Price of secondary fuel oil

d) Normative quantity of secondary fuel



June 2013

e) Normative auxiliary consumption

The above elements have been discussed in detail as under:

Price of primary fuel

3.196 Commission in its last order has approved the fuel cost for FY 2010-11 based on

actual landed cost submitted in the Petition and for FY 2011-12 and FY 2012-13

based on monthly coal prices submitted by TANGEDCO upto November 2011.

3.197 TANGEDCO in its Petition has submitted the station wise actual cost of fuel for FY

2010-11 and FY 2011-12 while estimated the fuel cost for FY 2012-13. The prices of

primary fuel approved by the Commission in its last tariff order and filed by

TANGEDCO in its current MYT Petition are tabulated below:

Table 91: Coal price in Rs./Tonne approved by the Commission in last order and filed by TANGEDCO in

its current Petition

Name of the

Power Station

As per last year tariff order Petition

FY 2010-11 FY 2011-12 FY 2012-13 FY 2010-11 FY 2011-12 FY 2012-13

Ennore TPS 2278 2261 2261 2552 2507 2452

Tuticorin TPS 3130 3814 3814 3022 4057 4279

Mettur TPS 3084 3395 3395 3071 4196 3721

North Chennai TPS 2559 2939 2939 2559 3188 3199

3.198 In response to additional information sought by the Commission, TANGEDCO has

submitted the actual landed fuel cost and blending ratio of its coal based plants in FY

2012-13. The actual fuel cost data submitted by TANGEDCO is given below.

Table 92: Revised landed cost of coal for FY 2012-13 as submitted by TANGEDCO

Power Plant Landed Cost of Coal

(in Rs./Tonne) Blending Ratio

ETPS 2,841 100:0

TTPS 3,659 81:19

MTPS 3,916 72:28

NCTPS 3,407 74:26

3.199 Since TANGEDCO has submitted the actual landed cost for FY 2010-11 and FY

2011-12, Commission has considered the TANGEDCO’s submission while for FY

2012-13 Commission has considered the landed cost for FY 2012-13 based on revised

submission of TANGEDCO. The fuel cost approved by the Commission for the first

control period is tabulated below:



June 2013

Table 93: Landed cost approved by the Commission – Rs./Tonne

Name of the

Power Station

Petition Commission

FY 2010-11 FY 2011-12 FY 2012-13 FY 2010-11 FY 2011-12 FY 2012-13

Ennore TPS 2552 2507 2452 2552 2507 2841

Tuticorin TPS 3022 4057 4279 3022 4057 3659

Mettur TPS 3071 4196 3721 3071 4196 3916


Gross calorific value

3.200 In its Petition TANGEDCO has submitted the actual gross calorific value of its coal

based stations for FY 2010-11 and FY 2011-12 and estimated the calorific value for

FY 2012-13. In reply to additional data sought by the Commission, TANGEDCO has

submitted the actual gross calorific value for its coal based stations in FY 2012-13. In

support TANGEDCO has also submitted the calculations for arriving at the average

GCV based on monthly consumption of imported and domestic coal.

Table 94: Revised GCV of coal submitted by TANGEDCO for FY 2012-13

Power Plant GCV of Coal (in

kCal/kg)

ETPS 3,235

TTPS 3,405

MTPS 3,551

NCTPS 3,615

3.201 Since TANGEDCO has submitted the actual calorific value for FY 2010-11 and FY

2011-12, Commission has considered the TANGEDCO’s submission while for FY

2012-13 Commission has accepted the revised submission of TANGEDCO. The gross

calorific value considered by the Commission for the first control period is tabulated

below:

Table 95: Gross calorific value of coal approved by the Commission – kCal/kg

Name of the

Power Station

Petition Commission

FY 2010-11 FY 2011-12 FY 2012-13 FY 2010-11 FY 2011-12 FY 2012-13

Ennore TPS 2822 3213 3190 2822 3213 3235

Tuticorin TPS 3210 3486 4320 3210 3486 3405

Mettur TPS 3048 3562 3562 3048 3562 3551


Station heat rate

3.202 TANGEDCO in its Petition sought relaxation is station heat rate (SHR) and submitted

the following major reasons for request of higher SHR:



June 2013

a) Degradation in performance due to ageing

b) Partial loading of machines

c) Usage of high ash content and inferior coal

3.203 However, Commission is of the view that the reasons specified by TANGEDCO are

not justifiable due to following reasons:

a) Degradation in performance due to ageing: Commission is allowing the R&M

expenses in accordance to its regulations that can be used for maintaining the

generating stations properly. Also for ETPS major capital investment has been

incurred without any commensurate benefits. Hence, Commission is not

considering any relaxation for ETPS. Similarly, Commission is not allowing

any relaxation in respect of other stations especially when capital expenditure

claimed is being allowed.

b) Partial loading of machines: TANGEDCO is required to properly manage its

units to operate at appropriate loads and hence Commission is not inclined to

accept this submission. Further when all units are dispatched to its full

availability due to prevailing shortages, there is no justification for part load

operation of the units.

c) Usage of high ash content and inferior coal: TANGEDCO has submitted for

TTPS usage of inferior and high ash content coal is one of the reasons for

higher SHR. Commission is of the view that TANGEDCO is required to sort

out the issue of receipt of inferior coal with the coal suppliers. Also,

TANGEDCO has the responsibility to inspect and ensure that the coal

received is of right quality.

3.204 Based on the above submissions, Commission is not accepting the relaxation sought

by TANGEDCO on SHR and has considered the SHR as approved in its last tariff

order for the purposes of calculating variable cost per unit.

Table 96: Station heat rate approved by the Commission (kCal/kWh)

Name of the

Power Station


FY

11

FY

12

FY

13

FY

11

FY

12

FY

13

FY

11

FY

12

FY

13

Ennore TPS 3200 3200 3200 3304 3905 4097 3200 3200 3200

Tuticorin TPS 2500 2453 2453 2901 2646 2705 2500 2453 2453

Mettur TPS 2500 2500 2500 2523 2549 2500 2500 2500 2500

North Chennai TPS 2466 2393 2393 2533 2480 2481 2466 2393 2393



June 2013

Auxiliary consumption and Secondary fuel oil consumption

3.205 In chapter A3, Commission has stated that it is considering the auxiliary consumption

as proposed by the Petitioner only for arriving at the energy availability purposes. For

the purpose of estimation of variable cost per unit, Commission has used the auxiliary

consumption as approved in the last tariff order. However, for NCTPS and TTPS

Commission in its last order based on TANGEDCO’s submission has provisionally

approved the auxiliary consumption as 4.35% and 10.11% for FY 2011-12.

TANGEDCO in the current Petition has submitted the actual auxiliary consumption

with respect to NCTPS and TTPS as 8.36% and 7.98% respectively. Commission is of

the view that the auxiliary consumption considered in the last tariff order for NCTPS

is too low while that for TTPS is on a higher side. In view of these discrepancies,

Commission has considered auxiliary consumption of 8.50% in accordance with its

tariff regulations for FY 2011-12.

Table 97: Auxiliary consumption considered by the Commission for the purpose of variable cost

calculations

Name of the

Power Station


FY 11 FY 12 FY 13 FY 11 FY 12 FY 13 FY 11 FY 12 FY 13

Ennore TPS 15.78% 16.32% 15.00% 15.78% 16.70% 15.00% 15.78% 16.32% 15.00%

Tuticorin TPS 8.31% 10.11% 8.50% 8.28% 7.98% 8.50% 8.31% 8.50% 8.50%

Mettur TPS 8.51% 8.31% 9.00% 8.30% 8.26% 8.34% 8.51% 8.31% 9.00%

North Chennai

TPS 8.89% 4.35% 8.50% 8.70% 8.36% 8.40% 8.89% 8.50% 8.50%

3.206 TANGEDCO in its Petition has proposed higher secondary fuel oil consumption for

ETPS and TTPS while lower SFO consumption for MTPS and NCTPS. SFO

consumption being a controllable parameter, in this true-up exercise Commission has

considered the SFO consumption as approved in its last tariff order for all the coal

based stations. The SFO consumption considered by the Commission for the first

control period is given below:

Table 98: Secondary fuel oil consumption approved for the first control period (ml/kWh)

Name of the

Power Station



Ennore TPS 12.00 10.00 10.00 12.20 10.60 12.00 12.00 10.00 10.00

Tuticorin TPS 2.00 2.00 2.00 5.95 1.97 3.00 2.00 2.00 2.00

Mettur TPS 2.00 2.00 2.00 0.98 0.52 1.29 2.00 2.00 2.00

North Chennai

TPS 2.00 2.00 2.00 1.10 0.73 0.63 2.00 2.00 2.00



June 2013

Price of secondary fuel

3.207 TANGEDCO in its Petition has given the price of secondary fuel as per actual costs incurred during for FY 2010-11 and FY 2011-12 and estimated the secondary fuel oil

price for FY 2012-13. In response to additional information sought by the

Commission, TANGEDCO has submitted month wise actual cost of secondary fuel

oil upto February 2013. The weighted average cost of secondary fuel for FY 2012-13

(Upto Feb 13) estimated by the Commission based on TANGEDCO’s submission is

tabulated below:

Table 99: Weighted average price of secondary fuel estimated by the Commission for FY 2012-13

(Rs./kL)

Power Plant Cost of secondary

fuel

ETPS 49112

TTPS 47916

MTPS 47417

NCTPS 47346

3.208 Commission is accepting the TANGEDCO submission of actual cost of secondary

fuel for FY 2010-11 and FY 2011-12 while approving the cost of secondary fuel for

FY 2012-13 based on the weighted average cost estimated by the Commission. The

cost of secondary fuel approved by the Commission is tabulated below:

Table 100: Cost of secondary fuel approved by the Commission (Rs./kL)

Name of the Power

Station



Ennore TPS 30174 40361 40361 39426 50691 50691 39426 50691 49112

Tuticorin TPS 29839 37653 37653 33764 42678 42678 33764 42678 47916

Mettur TPS 28988 36900 36900 33764 42678 42678 33764 42678 47417

North Chennai TPS 29753 39997 39997 30764 38806 38806 30764 38806 47346

GCV of the secondary fuel

3.209 TANGEDCO in its Petition has not submitted the GCV of secondary fuel considered

for estimating the variable cost. In response to data gaps, TANGEDCO has submitted

the GCV of the secondary fuel considered for arriving at the variable cost.

Table 101: GCV of secondary fuel submitted by TANGEDCO (kCal/lt)

Name of the Power Station FY 2010-11 FY 2011-12 FY 2012-13

Ennore TPS 10496 10480 10470

Tuticorin TPS 10570 10560 10645

Mettur TPS 10094 10104 10104

North Chennai TPS 10340 10359 10385



June 2013

3.210 In addition TANGEDCO has also submitted the month wise actual GCV of the

secondary fuel oil consumed at the power station in FY 2012-13 (upto Feb 2013).

Based on the data submitted by TANGEDCO, Commission has arrived at the

weighted average GCV of the secondary fuel for FY 2012-13.

Table 102: Weighted average GCV of secondary fuel estimated by the Commission for FY 2012-13

(kCal/Lt)

Power Plant Average GCV of

secondary fuel

ETPS 10502

TTPS 10639

MTPS 10466

NCTPS 10343

3.211 Commission is accepting the TANGEDCO submission of actual GCV of secondary

fuel for FY 2010-11 and FY 2011-12 while approving the GCV of secondary fuel for

FY 2012-13 based on the weighted average GCV estimated by the Commission. The

GCV of secondary fuel approved by the Commission is tabulated below:

Table 103: GCV of secondary fuel approved by the Commission (kCal/lt)

Name of the

Power Station

Last Order TANGEDCO Submission Commission


Ennore TPS 10491 10491 10491 10496 10480 10470 10496 10480 10502

Tuticorin TPS 10547 10547 10547 10570 10560 10645 10570 10560 10639

Mettur TPS 10544 10544 10544 10094 10104 10104 10094 10104 10466

North Chennai

TPS 10341 10341 10341 10340 10359 10385 10340 10359 10343

Variable Cost for Coal based stations

3.212 On the basis of above submissions, the Commission has calculated the variable cost

for various coal based power stations of TANGEDCO which is tabulated as under.

Commission has estimated the variable cost – ex bus considering the entire fuel cost

including oil.



June 2013

ETPS

Table 104: Variable Cost approved by the Commission for ETPS

Description Unit 2010-11 2011-12 2012-13

Capacity MW 450 450 450

Gross Station Heat Rate Kcal/kWh 3200 3200 3200

Secondary fuel oil consumption ml/kWh 12.00 10.00 10.00

Average calorific value of oil Kcal/l 10496 10480 10502

Average calorific value of Coal Kcal/Kg 2822 3213 3235

Weighted average price of oil Rs./Kl 39426 50691 49112

Average landed cost of coal Rs./MT 2552 2507 2841

Rate energy charges from Oil Paisa/kWh 47.31 50.69 49.11

Heat contributed from Oil Kcal/kWh 125.95 104.80 105.02

Heat contributed from Coal Kcal/kWh 3074.05 3095.20 3094.98

Specific consumption of coal Kg/kWh 1.09 0.96 0.96

Rate of energy from Coal Paisa/kWh 277.99 241.51 271.80

Variable Cost - Gross Paisa/kWh 325.30 292.20 320.92

Auxiliary Consumption % 15.78% 16.32% 15.00%

Variable Cost - Ex bus Paisa/kWh 386.26 349.19 377.55

Petition Paisa/kWh 398.07 420.64 430.69

Previous Tariff Order Paisa/kWh 304.73 312.4 308.05

TTPS

Table 105: Variable cost approved by the Commission for TTPS


Capacity MW 1050 1050 1050



















June 2013

MTPS

Table 106: Variable cost approved by the Commission for MTPS



















NCTPS

Table 107: Variable cost approved by the Commission for NCTPS





















June 2013

Gas based generating stations

Price of primary fuel

3.213 Commission in its last order has approved the fuel cost for FY 2010-11 based on

actual cost for FY 2010-11 and for FY 2011-12 and FY 2012-13 based on

submissions of TANGEDCO

3.214 TANGEDCO in its Petition has submitted the actual cost of fuel for FY 2010-11 and

FY 2011-12 while estimated the fuel cost for FY 2012-13. The prices of primary fuel

approved by the Commission in its last tariff order and filed by TANGEDCO in its

current MYT Petition are tabulated below:

Table 108: Fuel price for gas based stations approved by the Commission in last order and filed by

TANGEDCO in its current Petition

Name of the Power

Station Units

As per last year tariff order Petition

FY 2010-

11

FY 2011-

12

FY 2012-

13

FY 2010-

11

FY 2011-

12

FY 2012-

13

Tirumakottai GTPS Rs./SCM 8.55 8.55 8.55 7.25 8.45 9.72

Kuttalum GTPS Rs./SCM 8.55 8.55 8.55 7.32 8.55 9.53

Basin Bridge GTPS Rs./MT 33440 40440 40440 54260.00 56890.00 48630.00

Valathur - Unit 1 Rs./SCM 8.55 8.93 8.93 8.25 8.00 17.08

Valathur - Unit 2 Rs./SCM 8.93 8.93 8.25 8.00 17.08


submitted the monthly actual fuel cost of its gas based plants in FY 2012-13 (Upto

Feb 2013). Commission has estimated the weighted average fuel cost based on the

information submitted by TANGEDCO. In FY 2012-13, KGTPS was operational only

in Feb 2013 and hence for KGTPS Commission has considered the gas price

equivalent to that of weighted average gas price of TGTPS. The weighted average

fuel prices considered by the Commission for FY 2012-13 are tabulated below.

Table 109: Weighted average fuel prices for gas based plants for FY 2012-13 (Upto Feb 2013)

Power Plant Units Cost

Tirumakottai GTPS Rs./SCM 9.32

Kuttalum GTPS Rs./SCM 9.32

Basin Bridge GTPS Rs./MT 40625

Valathur - Unit 1 Rs./SCM 8.76

Valathur - Unit 2 Rs./SCM 8.78

3.216 Since TANGEDCO has submitted the actual fuel cost for FY 2010-11 and FY 2011-

12, Commission has considered the TANGEDCO’s submission while for FY 2012-13

Commission has considered its estimate for weighted average fuel cost based on

actual fuel cost data submitted by TANGEDCO. The fuel cost for gas based stations

approved by the Commission for the first control period is tabulated below:



June 2013

Table 110: Fuel cost approved by the Commission for gas based stations

Name of the Power

Station Units

Petition Commission

FY 2010-

11

FY 2011-

12

FY 2012-

13

FY 2010-

11

FY 2011-

12

FY 2012-

13



Basin Bridge GTPS Rs./MT 54260.00 56890.00 48630.00 54260 56890 40625




3.217 For gas based stations, Commission in its last order has approved a gross calorific

value of 10000 kCal/SCM considering the fact that TNEB is making payment

corresponding to GCV of 10000 Kcal / SCM and whenever the GCV is lesser than

10000 kcal/SCM, proportionate rebate is allowed.

3.218 TANGEDCO in its Petition has filed the GCV in accordance to the Commission’s

approval and hence Commission is accepting the submission of GCV for the purpose

of energy calculations. The GCV approved by the Commission for the first control

period is given below.

Table 111: Gross calorific value of primary fuel approved for gas based stations

Name of the

Power Station Units

As per last year tariff

order Petition Commission

FY

11

FY

12

FY

13

FY

11

FY

12

FY

13

FY

11

FY

12

FY

13

Tirumakottai

GTPS kCal/SCM 10000 10000 10000 10000 10000 10000 10000 10000 10000

Kuttalum GTPS kCal/SCM 10000 10000 10000 10000 10000 10000 10000 10000 10000

Basin Bridge

GTPS kCal/Kg 10572 10572 10572 10572 10972 10572 10572 10972 10572

Valathur - Unit 1 kCal/SCM 10000 10000 10000 10000 11000 10000 10000 11000 10000

Valathur - Unit 2 kCal/SCM 10000 10000 10000 10000 11000 10000 10000 11000 10000

Station heat rate

3.219 TANGEDCO in its Petition sought relaxation in station heat rate (SHR) for BBGTPS. Commission has already relaxed the SHR norms for BBGTPS in its tariff order dated

31st July 2010. For remaining stations, the SHR proposed by the Petitioner are in line

with Commission’s approval. SHR being a controllable parameter, Commission is

considering the SHR for gas based stations as approved in its last tariff order.



June 2013

Table 112: Station heat rate approved by the Commission for gas based stations

Name of the

Power Station

As per last year tariff order Petition Commission


Tirumakottai

GTPS 1845 1850 1850 1847 1898 1813 1845 1850 1850

Kuttalum GTPS 1850 1850 1850 1888 1871 1850 1850 1850 1850

Basin Bridge

GTPS 3230 3219 3219 3133 3221 3311 3230 3219 3219

Valathur - Unit 1 1790 1850 1850 1874 1725 1763 1790 1850 1850

Valathur - Unit 2 - 1850 1850 - 1833 1991 0 1850 1850

3.220 In chapter 3, Commission has stated that it is considering the auxiliary consumption

as proposed by the Petitioner only for arriving at the energy availability purposes. For

the purpose of estimation of variable cost per unit, Commission has used the auxiliary

consumption as approved in the last tariff order. However, for BBGTPS Commission

has accepted the submission of TANGEDCO for FY 2012-13.

Table 113: Auxiliary consumption considered by the Commission for the purpose of variable cost

calculations

Name of the Power

Station



Tirumakottai GTPS 6.19% 6.00% 6.00% 6.87% 6.49% 5.97% 6.19% 6.00% 6.00%

Kuttalum GTPS 6.83% 6.67% 6.00% 7.28% 7.32% 6.00% 6.83% 6.67% 6.00%

Basin Bridge GTPS 0.62% 0.30% 3.43% 0.65% 1.92% 0.51% 0.62% 0.30% 0.51%

Valathur - Unit 1 5.52% 5.87% 6.00% 5.90% 7.00% 6.16% 5.52% 5.87% 6.00%

Valathur - Unit 2 0.00% 5.84% 6.00% 5.90% 7.00% 6.16% 0.00% 5.84% 6.00%

Variable Cost for Gas based stations

3.221 Based on above submissions, the Commission has calculated the variable cost for

various gas based power stations of TANGEDCO which is tabulated as under. For

transportation charges, Commission has considered the submission of TANGEDCO

as they are in line with Commissions approval in the last tariff order.



June 2013

TGTPS

Table 114: Variable cost approved for TGTPS




Average calorific value of gas Kcal/SCM 10000 10000 10000

Average Cost of Gas Rs./ SCM 7.25 8.45 9.32

Rate of energy from Gas Ps/ kWh 133.76 156.33 172.42


Rate of energy - Net Ex bus Ps/ kWh 142.59 166.30 183.43

Net Generation MU 271.08 659.94 682.38

Total Cost excluding Transportation Rs. Crore 38.65 109.75 125.17

Transportation Cost Rs. Crore 4.67 7.11 1.87

Total Cost Rs. Crore 43.32 116.86 127.04

Variable Cost Ps/ kWh 159.82 177.08 186.17

Petition Ps/ kWh 161.01 182.30 190.11

Previous Tariff Order Ps/ kWh 175.99 175.72 176.12

KGTPS

Table 115: Variable cost approved for KGTPS













Variable Cost Ps/ kWh

188.04 220.03

Petition Ps/ kWh

191.17 205.10




June 2013

BBGTPS

Table 116: Variable cost approved for BBGTPS




Average calorific value of gas Kcal/Kg 10572 10972 10572

Average Cost of Fuel Rs./ MT 54260.00 56890.00 40625.00

Rate of energy from Fuel Ps/ kWh 1657.77 1669.06 1236.96








Petition Ps/ kWh 1618.51 1679.54 1538.64


VGTPS - 1

Table 117: Variable cost approved for VGTPS - 1














Petition Ps/ kWh 176.17 142.04 346.48




June 2013

VGTPS - 2

Table 118: Variable cost approved for VGTPS – 2


Capacity MW

92 92

Gross Station Heat Rate Kcal/kWh

1850 1850

Average calorific value of gas Kcal/SCM

11000 10000

Average Cost of Gas Rs./ SCM

8.00 8.78

Rate of energy from Gas Ps/ kWh

134.55 162.43

Auxiliary Consumption %

5.84% 6.00%

Rate of energy - Net Ex bus Ps/ kWh

142.89 172.80

Net Generation MU

414.44 455.83

Total Cost excluding Transportation Rs. Crore

59.22 78.77

Transportation Cost Rs. Crore

0.00 0.00

Total Cost Rs. Crore

59.22 78.77

Variable Cost Ps/ kWh

142.89 172.80

Petition Ps/ kWh

142.04 346.48

Previous Tariff Order Ps/ kWh

165.42 178.77


3.222 The Commission in last tariff order has determined the primary energy charges for

hydro generating stations on account of water charges, lubricants etc. The primary

energy charges claimed by TANGEDCO in its Petition for hydro generating stations

are in accordance with the Commission’s approval except for Tirunelveli hydro

generation circle. However, TANGEDCO has not provided any reasons for increase

in primary energy charges for Tirunelveli hydro generation circle in its Petition. In

view of the above submissions, Commission has considered the primary energy

charges as approved in its last tariff order.

Table 119: Primary energy charges approved for Hydro Generation Circles (Rs. Cr)

Generation

Circles

FY 2010-11 FY 2011-12 FY 2012-13

Last


Last


Last


Erode 0.03 0.00 0.03 0.04 0.10 0.04 0.04 0.10 0.04

Kundah 0.22 0.03 0.22 0.22 0.01 0.22 0.23 0.01 0.23

Kadamparai 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Tirunelveli 0.25 0.95 0.25 0.25 2.83 0.25 0.26 2.97 0.26



June 2013

Wind Generating Stations

3.223 The Commission in Tariff Order dated 31st July 2010 ruled that in the order No.3

dated 15-05-2006, the Commission has determined a tariff of Rs.2.75 / unit for the

wind power projects commissioned, and to be commissioned based on agreements

executed prior to May 15, 2006. Accordingly the Commission allowed the rate of Rs.

2.75/ Unit in 31st July 2010 order.

3.224 In its Petition TANGEDCO has considered the transfer price of Rs. 2.75 per unit as cost of generation from its wind mills in accordance to Commission’s order. Hence

Commission is accepting the TANGEDCO submission and is approving the cost of

wind generation from its own wind mills at Rs. 2.75 per unit.


3.225 Commission in its last order has approved the power purchase for FY 2010-11

considering the actual purchase, for FY 2011-12 based on revised submission of

TANGEDCO and for FY 2012-13 using merit order dispatch principle.

3.226 In this Petition TANGEDCO has claimed the power purchase expenses for FY 2010-

11 (for five months) based on audited accounts, for FY 2011-12 based on provisional

accounts and for FY 2012-13 estimated based on actual power purchase during the

previous two financial years. However, while considering the power purchase in its

Petition, TANGEDCO has excluded the wheeling units in accordance to the approach

adopted by the Commission in its last tariff order.

3.227 This section details out the approach adopted by the Commission in this true-up and

review exercise for the first control period.

Central generating stations

3.228 Commission in its last order has approved the power purchase quantum based on the

submissions of TANGEDCO, CERC provisional and final orders and considering a

5% escalation in variable cost. The power purchase expenses allowed by the

Commission in its last tariff order have been tabulated below.

Table 120: Power purchase expenses approved from central generating stations in last tariff order

Particulars

2010-11 2011-12 2012-13

Quantum Total Cost Quantum Total Cost Quantum Total Cost

MU Rs. Crore MU Rs. Crore MU Rs. Crore

NLC-TS-I 3066 630 3066 655 3066 658

NLC-TS-II (Stage-I) 3042 532 3242 769 3272 812

NLC-TS-II (Stage-II)

NLC-TS-I Expansion 1509 453 1609 505 1624 516

NTPC SR (I & II) 4039 806 4139 504 4164 909

NTPC SR (III) 1024 262 1105 862 1125 305

NTPC ER 735 224 885 291

52



June 2013

Particulars

2010-11 2011-12 2012-13



NTPC - Talcher II 3664 909 3690 324 3705 1127

Kayankulam 854 786 205 1082 0 0

MAPS 1399 277 1499 267 1508 321

KAIGA 860 263 1107 304 1178 390

Simahadri 328 349 1415 330

Kudankulam 0 106 1716 540

NLC-TS-

IIExpansion 0 0 1318 264

MAPS (Addl.) 518 155

NTPC-TNEB (JV) 2029 588

UI 1441 472 750 0 0 4

Total 21633 5613 21625 5784 26638 7473

3.229 TANGEDCO in its Petition has filed the power purchase expenses from CGS based

on audited accounts for FY 2010-11 and provisional accounts for FY 2011-12. For FY

2012-13, TANGEDCO has estimated the power purchase cost considered an

escalation of 5% on fixed charges and 4% on per unit variable charges and taking the

power purchase expenses for FY 2012-13 as a base.


provided a provisional estimate for actual power purchase expenses incurred during

FY 2012-13. The provisional estimate of actual power purchase expenses with respect

to CGS plants submitted by TANGEDCO is given below.

Table 121: Provisional estimate of actual power purchase from CGS for FY 2012-13 submitted by

TANGEDCO

Source Units

(MU)

Variable cost Fixed cost Total cost

Rs./Unit Rs. Cr Rs./Unit Rs. Cr Rs./Unit Rs. Cr

Neyveli - TS – I 3,189 2.24 714 1 319 3.24 1,033

Neyveli - TS - I –

Expansion 1,629 1.8 294 1.31 213 3.11 507

Neyveli - TS - II 3,291 1.9791 651.35 0.62 204 2.6 855

NTPC-SR I & II 4,149 1.68 697 0.6 250 2.28 947

NTPC-SR III 982 2 196 1.12 110 3.12 306

NTPC-Talcher - Stage II 3,405 1.41 481 0.83 283 2.24 764

NTPC-Kayankulam - - - - -

-

NTPC-Eastern Region 319 2.04 65 0.91 29 2.95 94

NTPC-Simhadri 1,079 1.99 214 1.77 191 3.75 405

NTPC-Dadri - - - - -

-

NTECL/Vallur 488 2.09 102 2.56 125 4.66 227

NPCIL-MAPS 1,775 2.04 361

2.03 361

Kaiga Atomic 1,261 3.02 381

3.02 381

Total 21,567 1.93 4,156 0.80 1,724 2.73 5,880



June 2013

3.231 Commission is accepting the power purchase cost from CGS with respect to FY 2010-

11 and FY 2011-12 as TANGEDCO submission is based on audited accounts and

provisional accounts for FY 2010-11 and FY 2011-12 respectively. For FY 2012-13,

Commission is approving the power purchase expenses based on provisional estimate

of actual power purchase submitted by TANGEDCO. The power purchase expenses

approved by the Commission during the first control period are tabulated below.

Table 122: Power purchase from CGS approved by the Commission in FY 2010-11

Source

Petition Commissions Approval

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charges

(Rs./

Unit )

Energy

Charges

(Rs.

Crore)

Total

Cost

(Rs.

Crore)

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charges

(Rs.

Crore)

Total

Cost

(Rs.

Crore)

NTPC SR

(I&II) 1658 69 1.60 266 334 1658 69 1.60 266 334

NTPC SR

III 449 57 1.49 67 124 449 57 1.49 67 124

NLC TS - I 1213 57 1.57 190 247 1213 57 1.57 190 247

NLC TS -

II 1244 129 0.70 87 216 1244 129 0.70 87 216

NLC TS

Expansion I 631 84 2.89 182 266 631 84 2.89 182 266

NTPC

Talcher 1542 136 1.66 256 392 1542 136 1.66 256 392

NTPC

Simhadri 0 - - - - 0 0 0.00 0 0

MAPS 591 - 2.02 119 119 591 0 2.02 119 119

KAIGA 454 - 3.08 140 140 454 0 3.08 140 140

NTPC

Kayakulum 343 106 7.15 245 351 343 106 7.15 245 351

NTPC ER 402 23 2.41 97 120 402 23 2.41 97 120

Total 8528 661 1.93 1,649 2,310 8528 661 1.93 1649 2310


Source


Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charges

(Rs.

/Unit )

Energy

Charges

(Rs.

Crore)

Total

Cost

(Rs.

Crore)

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charges

(Rs./

Unit )

Energy

Charges

(Rs.

Crore)

Total

Cost

(Rs.

Crore)

NTPC SR

(I&II) 4106 217 1.59 652 869 4106 217 1.59 652 869

NTPC SR

III 1048 88 1.87 196 284 1048 88 1.87 196 284

NLC TS - I 3146 155 1.65 521 676 3146 155 1.65 521 676

NLC TS -

II 3167 197 1.94 615 812 3167 197 1.94 615 812

NLC TS

Expansion I 1526 212 1.82 277 489 1526 212 1.82 277 489

NTPC

Talcher 3622 284 2.04 741 1025 3622 284 2.04 741 1025



June 2013

Source


Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charges

(Rs.

/Unit )

Energy

Charges

(Rs.

Crore)

Total

Cost

(Rs.

Crore)

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charges

(Rs./

Unit )

Energy

Charges

(Rs.

Crore)

Total

Cost

(Rs.

Crore)

NTPC

Simhadri 468 74 2.19 103 176 468 74 2.19 103 176

MAPS 1604 0 1.99 319 319 1604 0 1.99 319 319

KAIGA 1171 0 3.12 366 366 1171 0 3.12 366 366

NTPC

Kayakulum 205 65 9.87 203 268 205 65 9.87 203 268

NTPC ER 465 43 2.89 135 178 465 43 2.89 135 178

NTPC

Dadri 101 15 2.62 26 41 101 15 2.62 26 41

Total 20630 1352 2.01 4152 5503 20630 1352 2.01 4152 5503


Source


Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charges

(Rs.

/Unit )

Variable

Cost

(Rs.

Crore)

Total

Cost

(Rs.

Crore)

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charges

(Rs.

/Unit )

Variable

Cost

(Rs.

Crore)

Total

Cost

(Rs.

Crore)

NTPC SR

(I&II) 4164 228 1.65 688 916 4149 250 1.68 697 947

NTPC SR

III 1074 93 1.94 209 301 982 110 2.00 196 306

NLC TS - I 2937 163 1.72 505 668 3189 319 2.24 714 1033

NLC TS - II 3450 207 2.02 696 903 3291 204 1.98 651 855

NLC TS

Expansion I 1749 223 1.89 330 553 1629 213 1.80 293 507

NTPC

Talcher 3567 298 2.13 759 1057 3405 283 1.41 480 763

NTPC

Simhadri 599 77 2.28 136 214 1079 191 1.99 215 405

MAPS 1986 0 2.07 411 411 1775 0 2.04 362 362

KAIGA 1278 0 3.25 415 415 1261 0 3.02 381 381

NTPC

Kayakulum 0 0 0.00 0 0 0 0 0.00 0 0

NTPC ER 342 45 3.01 103 148 319 29 2.04 65 94

NTPC

Dadri 123 16 2.73 34 49 0 0 0.00 0 0

NTPC

Vallur 910 0 3.50 319 319 488 125 2.09 102 227

Kudunkulum 178 0 3.50 62 62 0

NLC TS - II

Expansion 397 0 3.50 139 139 0

Total 22755 1351 2.11 4806 6156 21567 1723 1.93 4157 5880



June 2013

Independent Power Producers

3.232 Commission in its last order has approved the power purchase quantum based on the

submissions of TANGEDCO and considering merit order despatch. Commission has

only allowed fixed cost for those IPPs which do not get scheduled as per merit order

despatch. The power purchase expenses allowed by the Commission in its last tariff

order have been tabulated below.

Table 125: Power purchase expenses approved from IPPs in last tariff order

Particulars

2010-11 2011-12 2012-13

Quantum

Total

Cost Quantum

Total

Cost Quantum

Total

Cost

MU

Rs.

Crore MU

Rs.

Crore MU

Rs.

Crore

GMR 875 779 962 1062 154

Samalpatti 378 385 351 459 94

PPN 2494 1202 1483 1233 309

Madurai 353 370 333 466 140

ST-CMS 1652 633 1711 684 1795 769

ABAN 820 246 776 252 810 261

Penna 370 118 366 125 375 128

Total 6942 3732 5982 4281 2980 1855

3.233 TANGEDCO in its Petition has filed the power purchase expenses from IPPs based

on audited accounts for FY 2010-11 and provisional accounts for FY 2011-12. For FY

2012-13, TANGEDCO has estimated the power purchase cost considered an

escalation of 5% on fixed charges and 4% on per unit variable charges and taking the

power purchase expenses for FY 2012-13 as a base.

3.234 Based on the TANGEDCO’s Petition Commission is of the view that power purchase

estimates for ABAN and Penna for FY 2012-13 have been interchanged inadvertently.

Similar type and trivial discrepancies have been observed in other filings related to

other expenses. Commission directs TANGEDCO to be careful in filing its Petition

and minimize the discrepancies in its data from next filing.


provided a provisional estimate for actual power purchase expenses incurred during

FY 2012-13. The provisional estimate of actual power purchase expenses with respect

to IPPs submitted by TANGEDCO is given below.

Table 126: Provisional estimate of actual power purchase from IPPs for FY 2012-13 submitted by

TANGEDCO

Source Units

(MU)



GMR Vasavi 610 10.41 635 2.74 167 13.15 802

Samalpatti 329 10.18 335 3.31 109 13.49 444

Pillaiperumalnallur 1,785 8.55 1,526 1.64 292 10.19 1,818



June 2013

Source Units

(MU)



Madurai Power Corpn 357 10.96 392 3.09 110 14.05 502

Neyveli Zero Unit

(STCMS) 1,665 2.32 385 2.18 364 4.50 749

Aban 850 2.00 170 1.38 117 3.38 288

Penna 375 2.04 77 1.54 58 3.59 135

Total 5,971 5.89 3,519 2.04 1,218 7.93 4,737

3.236 Commission is accepting the power purchase cost from IPPs with respect to FY 2010-

11 and FY 2011-12 as TANGEDCO submission is based on audited accounts and

provisional accounts for FY 2010-11 and FY 2011-12 respectively. For FY 2012-13,

Commission is approving the power purchase expenses based on provisional estimate

of actual power purchase submitted by TANGEDCO. The power purchase expenses

approved by the Commission during the first control period are tabulated below.

Table 127: Power purchase from IPPs approved by the Commission in FY 2010-11

Source


Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charges

(Rs./

Unit )

Energy

Charges

(Rs.

Crore)

Total

Cost

(Rs.

Crore)

Units

(MU)

Capacity

Charges

(Rs.

Crore)*

Energy

Charges

(Rs./

Unit )

Energy

Charges

(Rs.

Crore)

Total

Cost

(Rs.

Crore)

GMR 393 0 9.54 375 375 393 0 9.54 375 375

Samalpatti 179 0 10.68 191 191 179 0 10.68 191 191

PPN 1072 0 5.16 554 554 1072 0 5.16 554 554

Madurai 168 0 10.77 181 181 168 0 10.77 181 181

ST-CMS 606 0 4.84 293 293 606 0 4.84 293 293

ABAN 357 0 3.17 113 113 357 0 3.17 113 113

Penna 148 0 3.30 49 49 148 0 3.30 49 49

Total 2923 0 6.01 1757 1757 2923 0 6.01 1757 1757

*Capacity charges of five months are included in energy charges.


Source


Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charges

(Rs./

Unit )

Energy

Charges

(Rs.

Crore)

Total

Cost

(Rs.

Crore)

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charges

(Rs./

Unit )

Energy

Charges

(Rs.

Crore)

Total

Cost

(Rs.

Crore)

GMR 858 159 9.45 811 969 858 159 9.45 811 969

Samalpatti 292 116 10.18 298 414 292 116 10.18 298 414

PPN 1491 286 6.48 967 1252 1491 286 6.48 967 1252

Madurai 282 124 10.47 295 419 282 124 10.47 295 419

ST-CMS 1688 315 2.23 377 691 1688 315 2.23 377 691

ABAN 760 107 1.77 134 241 760 107 1.77 134 241

Penna 360 56 1.79 64 121 360 56 1.79 64 121

Total 5731 1162 5.14 2946 4107 5731 1162 5.14 2946 4107



June 2013


Source


Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charges

(Rs./

Unit )

Energy

Charges

(Rs.

Crore)

Total

Cost

(Rs.

Crore)

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charges

(Rs./

Unit )

Energy

Charges

(Rs.

Crore)

Total

Cost

(Rs.

Crore)

GMR 615 166 9.83 604 771 610 167 10.41 635 802

Samalpatti 273 122 10.59 289 411 329 109 10.18 335 444

PPN 1541 300 6.74 1039 1339 1785 292 8.55 1526 1819

Madurai 285 131 10.88 310 441 357 110 10.96 391 502

ST-CMS 1794 330 2.32 416 747 1665 364 2.32 386 749

ABAN 366 112 1.84 67 179 850 117 2.00 170 287

Penna 759 59 1.86 141 200 375 58 2.04 77 135

Total 5633 1220 5.09 2867 4087 5971 1218 5.89 3519 4737

Non conventional energy sources and Captive power plants

3.237 Commission in its last order has approved the power purchase expenses from

renewable energy sources and captive power plants based on the submissions of

TANGEDCO and considering rates approved by the Commission for procurement of

power from renewable energy sources. Also, Commission has not considered the

wheeling energy while approving the power purchase expenses for renewable energy

sources and captive power plants. The power purchase expenses allowed by the

Commission in its last tariff order from these sources have been tabulated below.

Table 130: Power purchase expenses approved from non conventional energy sources and captive power

plants in last tariff order

Particulars

2010-11 2011-12 2012-13

Quantum Total

Cost Quantum

Total

Cost Quantum

Total

Cost

MU Rs.

Crore MU

Rs.

Crore MU

Rs.

Crore

CPP 460 161 575 243 582 258

Solar 2.07 0.93 10.44 4.87 10.78 5.14

Wind 5263 1585 5130 1545 5408 1629

Cogeneration 997 351 1135 409 1202 430

Biomass 110 49 115 52 56 25

Total 6833 2147 6965 2254 7258 2347



June 2013

3.238 In response to data gaps and additional information sought by the Commission,

TANGEDCO has revised the power purchase expenses from these sources.

TANGEDCO has submitted that the treatment of wheeling units has not been

accounted properly in its Petition and hence accordingly has revised the quantum and

expenses from these sources. In addition, TANDECO has submitted the provisional

estimate of actual power purchase from these units net of wheeling units for FY 2012-

13. The revised power purchase expenses submitted by TANGEDCO from these

sources are tabulated below.

Table 131: Revised power purchase expenses from renewable energy sources and CPP submitted by

TANGEDCO

Particulars

2010-11 2011-12 2012-13



CPP 218 93.95 557 232.23 595 234.43

Solar 2.07 0.89 11.00 4.59 16.00 7.39

Wind -148 58.00 5711 1758.99 7145 2229.24

Cogeneration 388 255.57 1285 482.01 1428 501.23

Biomass 38 17.81 73 24.37 11 4.90

Total 498 426.22 7637 2502.19 9195 2977.18

3.239 In view of revised submission being in line with Commission’s approach and

TANGEDCO properly accounting the wheeling units, the Commission is approving

the power purchase expenses from renewable energy sources and CPP based on

TANGEDCO’s revised submission. The approved power purchase expenses from

these sources are tabulated below.

Table 132: Power purchase expenses from renewable energy sources and CPP approved by the

Commission for FY 2010-11

Particulars

Petition Commission

Quantum Cost Cost Quantum Total Cost Cost

MU Rs. Crore Rs./Unit MU Rs. Crore Rs./Unit

CPP 218 36 1.63 218 93.95 4.31

Solar 2 1 4.50 2.07 0.89 4.31

Wind* -148 58

-148 58

Cogeneration 388 256 6.59 388 256 6.59

Biomass 38 18 4.69 38 18 4.69

Total 498 368

498 426

*Wheeling units from Nov to March are more than actual wind generation



June 2013

Table 133: Power purchase expenses from renewable energy sources and CPP approved by the


Particulars

Petition Commission



CPP 2,778 473 1.70 557 232 4.17

Solar 11 9 7.88 11.00 4.59 4.17

Wind 5,893 2,379 4.04 5711 1759 3.08

Cogeneration 1,285 650 5.06 1285 482 3.75

Biomass 73 33 4.52 73 24 3.35

Total 10,040 3,543 3.53 7637 2502 3.28

Table 134: Power purchase expenses from renewable energy sources and CPP approved by the Commission for FY 2012-13

Particulars

Petition Commission



CPP 705 307 4.36 595 234 3.94

Solar 21 10 4.73 16.00 7.39 4.62

Wind 5,067 1,649 3.26 7145 2229 3.12

Cogeneration 1,771 688 3.89 1428 501 3.51

Biomass 783 372 4.74 11 5 4.45

Total 8,347 3,026 3.63 9195 2977 3.24

Power purchase from traders and other sources

3.240 In the last tariff order Commission has approved the power purchase expenses from

traders at capped rate of Rs. 5.32 for FY 2010-11 and FY 2011-12. For FY 2012-13,

Commission has approved purchase from traders at 2000 MU at an average rate of Rs.

4.00/ kWh. However, Commission has directed TANGEDCO take prior approval

from the Commission in case power purchase from traders in FY 2012-13 exceeds the

quantum and rate specified in this Tariff Order. The expenses for purchase of power

from traders as approved in the last tariff order are given below.

Table 135: Power purchase expenses approved from traders in last tariff order

Particulars

2010-11 2011-12 2012-13

Quantum

(MU)

Cost

(Rs.

Crore)

Cost

(Rs./

Unit)

Quantum

(MU)

Cost

(Rs.

Crore)

Cost

(Rs./Unit)

Quantum

(MU)

Cost

(Rs.

Crore)

Cost

(Rs./

Unit)

Traders 10540 5607 5.32 9400 5000 5.32 2000 800 4.00



June 2013

3.241 The power procurement filed by TANGEDCO from bilateral sources and exchange is

within the limits of the Commission’s approval for FY 2010-11 and FY 2011-12.

However, Commission has observed some discrepancies in the per unit rate of power

procured from traders. In response to this query TANGEDCO has revised the power

purchase expenses and units after properly adjusting the wheeling units. In addition,

TANGEDCO has submitted the actual purchase from these sources in FY 2012-13.

3.242 Apart from these sources, TANGEDCO has also procured power from UI and NTPC

NVVN. In response to Commission’s query TANGEDCO has revised the average UI

rate submitted for FY 2010-11 and FY 2011-12 and also submitted the revised power

purchase expenses from these sources. The revised power purchase expenses

submitted by TANGEDCO for procurement of power from traders, NTPC NVVN and

UI are tabulated below.

Table 136: Revised power purchase expenses submitted by TANGEDCO from traders and other sources

Particulars

2010-11 2011-12 2012-13

Quantum Total Cost Quantum Total

Cost Quantum

Total

Cost

MU Rs. Crore MU Rs.

Crore MU

Rs.

Crore

Traders - Bilateral and

Exchange 3085 1701 7395 3838 6,575 3,347

Traders - Exchange 1618 963 1032 360 213

UI 759 230 718 327 81 49

NTPC NVVN 181 91 694 262 35 16

Total 5643 2985 9838 3763 7051 3625

3.243 Commission is of the view that though UI is not a scheduled and an approved power,

TANGEDCO was required to over draw from the grid in cases where it was not able

to match the demand and supply. Also, the UI quantum has progressively decreased

indicating the better management of demand-supply. For FY 2010-11 and FY 2011-

12, the total expenses and quantum of power procured from traders and UI are within

the total approved quantum and expenses for FY 2010-11 and FY 2011-12. For FY

2012-13, though TANGEDCO has exceeded the quantum of power approved by the

Commission, there has been a decrease in purchase compared to FY 2011-12.

Commission is provisionally accepting the submission of TANGEDCO especially

when CoD of new plants is getting delayed. The power purchase expenses from these

sources approved for the control period are tabulated below.

Table 137: Power purchases expenses from other sources approved by the Commission for FY 2010-11

Particulars

Petition Commission


MU Rs.

Crore Rs./Unit MU Rs. Crore Rs./Unit

Traders - Bilateral &

Exchange 4703 1897 4.03 4703 2664 5.66

UI 759 340 4.48 759 230 3.03

NTPC NVVN 181 91 5.03 181 91 5.01

Total 5,643 2,328 4.13 5643 2985 5.29

*Approved based on revised submission



June 2013


Particulars

Petition Commission*




Exchange 6206 1686 2.72 8427 3838 4.55

UI 718 403 5.61 718 327 4.56

NTPC NVVN 694 262 3.78 694 262 3.78

Total 7,617 2,351 3.09 9838 4427 4.50



Particulars

Petition Commission*




Exchange 9,816 3,066 3.12 6935 3560 5.13

UI

81 49 6.09

NTPC NVVN 694 275.62 3.97 35 16 4.45

Total 10,510 3,342 3.18 7051 3625 5.14


3.244 With respect to power purchase expenses, Commission gives following directives:

a) Considering the iterations that went in reconciling the power purchase expenses pertaining to wheeling units, Commission directs TANGEDCO to properly maintain

the power purchase expenses with and without wheeling units.

b) Commission has observed various discrepancies in power purchase expenses filing of

TANGEDCO. In response to Commission’s query, TANGEDCO has revised the

expenses after correcting the mistakes. Commission is taking a serious note of this

casual attitude in filing the power purchase expenses and directs TANGEDCO to file

its Petition properly from next tariff filling.

Power Grid Corporation of India Limited (PGCIL) Charges

3.245 TANGEDCO has proposed PGCIL charges as per audited accounts for FY 2010-11 and provisional accounts for FY 2011-12. Also, TANGEDCO has proposed

ABTPGCIL charges under PGCIL charges. In response to Commission’s query,

TANGEDCO has replied that they have inadvertently claimed ABTPGCIL charges

under PGCIL charges and these correspond to UI. Hence, Commission is not

approving these charges claimed by TANGEDCO.



June 2013

3.246 For FY 2012-13, TANGEDCO has revised the PGCIL charges considering the provisional estimates of actual transmission charges incurred. Due to the fact that FY

2010-11, FY 2011-12 and FY 2012-13 are already over and as TANGEDCO has

provided the actual expenses incurred, Commission is accepting the submission of

TANGEDCO for PGCIL wheeling and reactive energy charges.

Table 140: PGCIL charges approved by the Commission for the first control period (Rs. Cr.)

Parameter

2010-11 2011-12 2012-13

Last


Last


Last


PGCIL - SR

and ER

wheeling 190 204 204 480 524 524 504 550 540

PGCIL -

Reactive

energy 5 5 17 17 18 15

ABTPGCIL 230 313 329

Total 190 438 208 480 854 541 504 897 555

Intrastate Transmission Charges

3.247 For FY 2010-11 and FY 2011-12, TANGEDCO has claimed actual intrastate

transmission charges paid to TANTRANSCO. For FY 2012-13, TANGEDCO has

estimated the transmission charges based on Commission’s tariff order on

“Determination of Intra-State Transmission Tariff and other related charges” dated

March 30, 2012.

3.248 Commission has considered the TANGEDCO’s submission for FY 2010-11 and FY

2011-12 as TANGEDCO has submitted the actual transmission expenses incurred.

However for FY 2012-13, considering the allotted capacity of TANGEDCO,

Commission has provisionally determined the transmission charges required to be

paid for FY 2012-13.

3.249 The intrastate transmission charges approved by the Commission for the first control

period are given below.

Table 141: Transmission Charges payable to TANTRANSCO for the first control period (Rs. Cr.)

Parameter

2010-11 2011-12 2012-13


Transmission charges

payable to TANTRANSCO 509 509 1665 1665 3076 2847

Note: Transmission charges may undergo a change upon implementation of APTEL Order in

Appeal No. 102 of 2012.



June 2013

Aggregate Revenue Requirement and Revenue Gap for the first control

period

3.250 Regulation 70 of the Tariff Regulations 2005 specifies the following:

“70. The Aggregate Revenue Requirement of Distribution licensee

The Aggregate Revenue Requirement of Distribution licensee consists of

thefollowing:-

(i) Cost of Power Purchase

(ii) Operation and Maintenance expenses

(iii) Depreciation

(iv) Interest and cost of finance

(v) Income Tax

(vi) Provision for Bad and Doubtful Debts

(vii) Provision for Insurance

(viii) Provision for contingency reserve

(ix) other expenses

(x) Return on equity / Reasonable rate of return”

3.251 Based on the approved expenses in the above sections of this Chapter, the Aggregate Revenue Requirement approved by the Commission for the first control period is

tabulated below:

Table 142: ARR approved by the Commission for the first control period (Rs. Cr.)

Parameter

Last year order Petition Commission

FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

Expenses in respect of own

Generation 2232 6582 8939 3270 8761 8399 2894 7830 7635

Power Purchase Cost 7316 17800 11675 7200 16360 17508 7687 17082 17775

Annual Transmission

Charges payable to

TANTRANSCO

744 1917 3076 509 1665 3076 509 1665 2847

Operation and Maintenance

Expenses 1093 2728 2837 1388 3652 3691 1282 3327 3477

Depreciation 95 254 287 115 284 303 110 273 302

Interest on Long term loan 688 3150 3355 693 1917 2139 495 1053 1329

Other Debits & extra

ordinary items 12 29 29 11 38 27 11 14 17

Prior Period Debit/(Credit)

Charges 0 1052 0 0 0 0

Reasonable Return / Return

on Equity 65 236 331 0 0 0


164 466 701 0 0 0

Contribution to

Contingency Reserves 0 0 72 0 0 0

ARR 12180 32460 30198 13415 34431 36247 12987 31244 33382



June 2013

Non Tariff and Other Income

3.252 TANGEDCO has submitted in its petition, the Non tariff income for FY 2010-11 (5

months) based on audited accounts as Rs. 216.9 Crores as compared to Rs. 217.5

Crores approved in the last order. The Commission has accepted the actual as per

audited accounts for FY 2010-11. For the year FY 2011-12 TANGEDCO had filed an

amount of Rs. 643.7 Crores in its petition as against Rs. 624 Crores approved in the

last order. As per provisional accounts for the year it was found that the revenue was

only Rs. 553.0 Crores. The Commission has considered the actual as per the

provisional accounts. For the year FY 2012-13 Commission has considered the same

escalation as assumed by TANGEDCO for proposing NTI for the year. Therefore

based on data as per provisional accounts of FY 2011-12 and escalation rate as

provided by TANGEDCO, the Commission has approved NTI for the first control

period.

3.253 The other income mainly comprises of interest on staff loans and advances, income

from investments, income from trading, rebate on power purchase bills, interest on

staff welfare and gain on sale of fixed asset.

3.254 TANGEDCO in its petition has filed Other Income for FY 2010-11 and FY 2011-12

separately for Generation and Distribution business. The Commission on scrutiny of

the audited and provisional accounts found that the total income booked under the

head Other Income for TANGEDCO matches with the segregated incomes as

provided by TANGEDCO in its petition. Hence the Commission has approved the

Other Income as filed by TANGEDCO for FY 2010-11 and FY 2011-12. For FY

2012-13 the Commission has accepted the Other Income as projected by

TANGEDCO for its Distribution business. The table below captures the data filed by

TANGEDCO and approved Non Tariff Income and Other Income for FY 2010-11 to

FY 2012-13.

Table 143: Non Tariff and Other Income approved by the Commission (Rs. Cr)

Particulars Petition Approved

FY 11 FY 12 FY 13 FY 11 FY 12 FY 13

Non Tariff Income 216.94 643.66 688.82 216.94 553.00 592.36

Other Income 92.52 141.05 132.43 92.52 141.05 132.43

Total 309.46 784.71 821.25 309.46 694.05 724.79

Estimation of additional power purchase cost due to higher T&D loss

3.255 Regulation 3 (ix) of TNERC (Terms and Conditions for Determination of Tariff for

Intra state Transmission / Distribution of Electricity under MYT Framework)

Regulations, 2009, states as under:

“3 (ix). Mechanism for sharing approved gains or losses arising out of controllable

factors.



June 2013

The financial loss, if any, due to failure to achieve the target for the controllable costs

in any of the years in the control period shall be borne by the licensees and the

efficiency gains, if any, with respect to controllable parameters shall be shared

between the licensee and the consumer in the ratio of 2:1”

3.256 The Commission notes that the due to higher T&D loss compared to that approved by

the Commission in this order, additional power purchase cost incurred by

TANGEDCO is given below. The additional power purchase cost is estimated

considering the energy requirement and average power purchase cost at TN periphery.

For this purpose, Commission has assumed an interstate transmission loss of 4.38%

based on the submission of TANGEDCO.

Table 144: Additional power purchase cost for the first control period due to higher T&D losses

Parameter FY 2011 FY 2012 FY 2013

Energy input required at TN Periphery (Based on approved

sales and losses) - MU 25478 64224 60097

Energy available at TN Periphery (Considering 4.38% loss on

interstate purchase) - MU 27504 68623 65750

Power Purchase Cost 10581 24912 25409

Per unit Power Purchase Cost - TN Periphery 3.85 3.63 3.86

Additional Units – MU 2025 4398 5653

Additional Power Purchase Cost - Rs. Cr. 779 1597 2185

3.257 Regulation (25) of TNERC (Terms and Conditions for Determination of Tariff for

Intra state Transmission / Distribution of Electricity under MYT Framework)

Regulations, 2009, states as under:

“25) Aggregate Technical and Commercial loss ( AT & C )

The Commission shall fix benchmarks for reduction of losses and the licensee shall achieve

the target fixed for each year of the control period

.

The AT & C loss is a controllable item and the financial loss, if any, on account of

failure to achieve the target shall be borne by the Distribution licensee. The gains, if

any, on account of achieving the loss below the targeted level shall be shared with the

consumers.”

3.258 It is pertinent to mention that AT&C loss is usually calculated considering distribution

loss and AT&C loss being a controllable item, the Commission is of the view that

additional power purchase cost due to higher T&D loss cannot be passed onto

consumers. Hence, Commission is reducing the additional power purchase cost

estimated for higher T&D loss from the ARR of TANGEDCO while at net ARR for

the first control period. The net ARR approved for the first control period is tabulated

below:



June 2013

Table 145: Net Revenue Requirement approved by the Commission for the first control period (Rs. Cr.)

Parameter

Last year order TANGEDCO filing Commission

FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

Aggregate Revenue

requirement 12200 32460 30198 13415 34431 36247 12987 31244 33382

Less: Other income and

NTI 362 972 862 309 785 821 309 694 725

Less: Additional Power

Purchase cost due to

higher T&D loss

0 0 0 0 0 0 779 1597 2185

Net Revenue

Requirement 11838 31488 29336 13105 33646 35426 11898 28953 30472

Revenue from Sale of Power – FY 2010-11 and FY 2011-12

3.259 The following table shows the category-wise revenue for the last five months of FY

2010-11 and for FY 2011-12 as approved by the Commission. The revenue shown in

the table is based on the tariffs approved by the Commission for the respective years

and is exclusive of subsidy. The numbers are as per the audited accounts and

provisional accounts of TANGEDCO for the respective years after adjusting revenue

from wheeled units.

Table 146: Category wise Revenue for FY 2010-11(5 months) and FY 2011-12 as approved by the

Commission (Rs. Cr.)

Consumer Category

FY 2010-11 FY 2011-12

Revenue Revenue

High Tension Supply (HT)



II-A Govt. Educational Inst. Hospitals, water supply etc. 232 581

II-B Pvt. Educational Inst., Cinema theatres & Studios 28 123

II-C Actual places of public worship, Mutts and Religious Inst. 3 9

III HT Commercial 554 1,311

IV Lift Irrigation, Co-operative societies - -

Supply to Other States (SWAP) 26 219

Sub Total HT 3,711 8,239

Low Tension Supply (LT)

I-A Domestic Purposes 1,038 2,889

I-B Huts in Village Panchayats, TAHDCO etc. - -

I-C Defence Colonies etc. Notified Tariff 2 9

II-A Public Lighting and Public Water Supply & Sewerage 219 526

II-B-1 Govt. Educational Inst., Hospitals, water supply etc. 98 279

II-B-2 Private Educational Inst., Cinema theatres & Studios 4 136



June 2013

Consumer Category

FY 2010-11 FY 2011-12

Revenue Revenue

IIC Actual places of public worship 22 25

IIIA 1 Cottage and Tiny Industries, 75 152


IIIB Coffee grinding and Ice factories etc. and Industries not

covered under LT Tariff IIIA 786 1,968

IV Agriculture and Govt. seed farms - -

V Commercial and all categories of Consumers not covered under IA,

IB,IC, IIA, IIB, IIIA, III B and IV 1,156 3,035

VI Temporary supply: (a) Lighting and combined installation, (b) Lavish

illuminations 10 25

Sub Total LT 3,448 9,165

Total HT and LT 7,160 17,404

3.260 The Commission has accepted the actual revenue earned but has not allowed the

revenue corresponding to sale of power to Puducherry and wheeled units.

TANGEDCO has also filed revenue of Rs. 26 Crores and Rs. 219 Crores from SWAP

arrangements for the above two years respectively. The same has also been

considered by the Commission as part of revenue for TANGEDCO.

3.261 Commission has also considered the actual subsidy received by TANGEDCO in FY

2010-11 and FY 2011-12 during the true-up exercise. The total revenue approved by

the Commission is given below.

Table 147: Revenue approved by the Commission for FY 2010-11 and FY 2011-12 (Rs. Cr)

Parameter 2010-11 2011-12

Revenue from Sale of Power 7,159 17,404

Govt. Subsidy 689 2,071

Total 7,848 19,475

Revenue from Sale of Power – FY 2012-13

3.262 The following table shows the total HT and LT revenue for FY 2012-13 as per the petition and as revised and filed by TANGEDCO in its reply to data gaps.

Table 148: Revised revenue filed by TANGEDCO for FY 2012-13 (Rs. Crores)

Sl.

No. Particulars

As filed in the

petition Revised Filing

1 Total HT Revenue 8,689 7,768

2 Total LT Revenue 17,020 15,847

3 Total Revenue HT+LT 25,709 23,615



June 2013

3.263 The following table shows the category-wise revenue as filed by TANGEDCO in its reply to data gaps and as approved by the Commission for FY 2012-13 based on

revised sales estimates. The revenue has been calculated based on the approved tariff

for FY 2012-13. The revenue so projected is inclusive of subsidy from the GoTN.

Table 149: Revenue for FY 2012-13 as per the petition and as approved by the Commission (Rs. Cr)

Particulars Revised filing Approved




II-A Govt. Educational Inst. etc. 496 496

II-B Pvt. Educational Inst. etc. 155 155

III HT Commercial 1,155 1155

IV Lift Irrigation 1 1

V Temporary supply 176 176

Others (Sale to Puducherry) 338 0

Total HT 7,768 7,547


I-A Domestic 5,848 5,962

I-B Huts 103 105

I-C LT bulk supply 4 4

II-A Public Lighting and Water Supply 908 908

II-B-1 Govt. Educational Inst. etc. 66 66

II-B-2 Pvt. Educational Inst. etc. 144 144

IIC Places of Public Worship 57 57

IIIA 1 Cottage and Tiny Industries 50 50


IIIB L.T. Industries 2,674 2,674

IV L.T. Agriculture 1,940 1,940

V L.T. Commercial 3,627 3,627

VI Temporary supply 42 42

Total LT 15,847 15,963

Total HT + LT 23,615 23,510

3.264 Therefore the Revenue from sales for FY 2012-13 as approved by the Commission is

Rs. 23,510 Crores. This revenue is inclusive of the subsidy component.

Low Power Factor Surcharge

3.265 TANGEDCO in its reply to data gaps submitted collection made with respect to Low

power factor surcharge of Rs. 51.03 Crores for FY 2012-13. The Commission has

accepted the same and considered this revenue while computing the revenue gap for

the year.

3.266 The total revenue approved by the Commission including revenue from low power

factor surcharge for FY 2012-13 is Rs. 23561 Crs.



June 2013

Revenue Gap for the first control period

3.267 On the basis of net revenue requirement and revenue approved by the Commission,

the Revenue Gap approved by the Commission for the first control period is tabulated

below.

Table 150: Revenue gap approved by the Commission (Rs. Cr.)

Parameter

Last year order TANGEDCO filing Commission

FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

FY

2011

FY

2012

FY

2013

Net Revenue Requirement 11818 31488 29346 13105 33646 35426 11898 28953 30472

Less: Revenue from Tariffs

(including subsidy) 7651 18076 29347 7332 18763 25707 7848 19475 23561

Revenue Gap 4167 13412 -1 5773 14883 9719 4050 9478 6911



June 2013

A4: AGGREGATE REVENUE REQUIREMENT FOR THE SECOND

CONTROL PERIOD – FY 2013-14 TO FY 2015-16

Energy Sales

4.1 TANGEDCO has projected energy consumption using the historical trend method by

applying the category-wise Compounded Annual Growth Rate (3 years and 5 years

CAGR) appropriately. The growth factors have been corrected for the instances where

the trend appeared unreasonable. The sales growth has been projected on a yearly

basis, based on the actual consumption for the first half of 2012-13 and based on

TANGEDCO’s understanding on availability of power and impact of other external

factors.

4.2 TANGEDCO opines that the demand growth can be linked to the growth rate of the

State and the country which is estimated at around 8% in the Twelfth Plan and power

sector being one of the key sectors to support such growth will also grow at a similar

pace. Therefore, the growth has been linked to two elements namely the growth

within the State and the additional power available to meet unrestricted demand.

4.3 Considering the deficit situation in the State and implementation of R&C measures,

the historical trend alone were not considered while projecting sales for FY 2013-14.

TANGEDCO has projected an overall growth in sales for FY 2013-14 of around 16%

which is considered based on 8% sector growth rate and around 8% increase in

consumption due to additional availability of power.

a) HT Categories – The HT Industrial Category is facing 40% R&C

measures. These measures are expected to be relaxed in FY 2013-14 due

to availability of additional power. Therefore sales under this category are

expected to increase by 15% during FY 2013-14.

b) LT Categories – As reasoning for increase in consumption projected for

LT consumer categories, TANGEDCO has provided the following

remarks. Considering that large quantum of the additional power will be

available in FY 2013-14, major quantum has been projected for LT

consumers who are covered under load shedding. Domestic consumers

being a major group in the consumer mix has resulted in an increase of

23% over that of FY 2012-13.

TANGEDCO expects significant increase in Hut and Agriculture

Consumption for FY 2013-14 due to availability of power from upcoming

plants from own and central generating stations. It is expected that this

additional power will be used by LT category consumers for reduction of

load shedding hours which are currently prevailing in the State.

Considering the above factors, TANGEDCO has revised the growth rates

for Hut and Agriculture consumers on par with other LT consumers.



June 2013

It is also expected that there will be a marginal reduction in growth rate for LT

Industries category as they would restart their operation from the existing

reduced production due to the power deficit situation.

4.4 Similarly, the sales growth was estimated for other categories of LT consumers based

on the connected load and number of consumers in each category.

Table 151: CAGR Growth in consumption as indicated in the petition as well as

submitted in reply to data gaps

Consumer Category As per petition Revised submission

2013-14 2014-15 2015-16 2013-14 2014-15 2015-16

HT Category

HT Industries 15% 16% 4% 15% 16% 4%

Commercial and Other HT 24% 20% 6% 24% 20% 6%

Lift Irrigation and co-ops (HT) 6% 6% 1% 24% 20% 6%

TOTAL HT 15% 15% 4% 15% 15% 4%

LT Category

Domestic 12% 12% 6% 23% 10% 6%

Huts 7% 7% 6% 19% 7% 6%

Industries 15% 11% 4% 13% 11% 4%

Agriculture & Government seed farm 6% 6% 2% 10% 4% 2%

Commercial and Other 14% 16% 6% 14% 16% 6%

TOTAL LT 16% 10% 5% 16% 10% 5%

TOTAL DEMAND 16% 11% 5% 16% 11% 5%

4.5 The sales growth projected by TANGEDCO in its petition is as follows:

Table 152: Sales Projection for the second MYT control period (MUs)

Particulars

As per petition Revised submission

2013-14 2014-15 2015-16 2013-14 2014-15 2015-16


I-A HT Industries 9,107 10,564 11,029 8,152 9,456 9,872

I-B Railway Traction 798 848 861 813 911 951

II-A Govt. Educational Inst. etc. 1,190 1,333 1,391 1,035 1,159 1,210

II-B Pvt. Educational Inst. etc. 293 328 343 256 287 300

II-C Places of Public Worship 6 7 8 0 0 0

III HT Commercial 2,277 2,732 2,905 1,626 1,951 2,074

IV Lift Irrigation 7 7 7 5 6 6

V Supply to Puducherry and Other States 413 413 413 426 428 423

VI Temporary supply 5 5 5 175 186 189

Total HT 14,096 16,238 16,962 12,487 14,384 15,025


I-A Domestic 23,237 25,666 27,085 21,526 23,776 25,092

I-B Huts 508 543 577 508 543 577



June 2013

Particulars

As per petition Revised submission

2013-14 2014-15 2015-16 2013-14 2014-15 2015-16

I-C LT bulk supply 12 13 13 10 11 11

II-A Public Lighting and Water Supply 2,018 2,250 2,349 1,750 1,951 2,037

II-B-1 Govt. Educational Inst. etc. 158 181 189 124 141 147

II-B-2 Pvt. Educational Inst. etc. 317 366 382 220 254 265

IIC Places of Public Worship 156 178 186 120 136 142

IIIA 1 Cottage and Tiny Industries 151 168 172 141 157 161

IIIA 2 Power Looms 1,073 1,234 1,264 863 993 1,017

IIIB L.T. Industries 5,659 6,301 6,578 4,837 5,385 5,622

IV L.T. Agriculture 10,269 10,433 10,600 12,159 12,603 12,891

V L.T. Commercial 6,182 7,196 7,651 5,521 6,427 6,834

VI Temporary supply 30 34 35 43 50 51

Total LT 49,770 54,561 57,081 47,822 52,426 54,847

Total HT + LT 63,866 70,799 74,043 60,309 66,809 69,871

4.6 As part of reply to data gaps TANGEDCO has revised its projections of energy

consumption for the MYT control period of FY 2013-14 to FY 2015-16 based on

actual sales upto February and one month estimate for March of FY 2012-13.

TANGEDCO has stated that the projections for FY 2013-14 to FY 2015-16 are based

on a confluence of factors namely, past trend in sales growth, actual sales in 2012-13,

and additional availability of energy from 2013-14 onwards. The growth rate in FY15

and FY16 are said to significantly decrease as compared to FY 2013-14 since the

normal growth rate is expected to be restored by FY 2013-14, when majority of the

additional generating capacity is added to the system.

4.7 The Commission after scrutiny of the revised submissions observes the following:

• Sale to Metered categories: Given the fact that additional capacity to the tune

of 3,971MW will be available during FY2013-14 onwards the power supply

position is expected to improve. Hence the Commission after taking into

cognisance the additional availability of energy has decided to allow sales as

filed by TANGEDCO in its reply to data gaps for all metered categories

except HT Industries and LT-Domestic categories.

The Commission has re-estimated the sales projections for two metered

categories namely HT- Industrial and LT-Domestic categories as the growth

rates projected by TANGEDCO for these two categories seem inaccurate.

• Industries (HT-IA): To arrive at a realistic consumption for this category,

the Commission has adopted the following approach.

The Commission has estimated the increase in consumption due to

improving power supply. As elaborated earlier, FY 2013-14 will see

capacity addition to the tune of 3,971MW, directly impacting the load

shedding being imposed.



June 2013

Further to arrive at an appropriate base consumption the Commission has

calculated the 5 year CAGR growth rate of this category of consumers

upto FY 2011-12 as 4.2%. This rate has been calculated to exclude the

negative growth rate that occurred in the year FY2012-13 due to

imposition of R&C measures. This growth rate has been applied on the

revised sales as projected by TANGEDCO for 2012-13 to arrive at the

base consumption for FY 2013-14. With the improving power supply, the

industrial consumption is expected to increase. Hence, to the increased

sales thus arrived the Commission has incorporated the impact of

improving power supply position. For estimating the impact of improved

supply, Commission has relied upon average load relief per day in FY

2012-13.

The calculation for the same has been shown in the tables below.

Table 153: HT Industrial consumption for the MYT control period FY2013-14 to 2015-16

Sl. No. Particulars 2012-13 2013-14

(MUs)

2014-15

(MUs)

2015-16

(MUs)

1 Revised Industrial sales projected for 2012-13 by

TANGEDCO (MUs) 7,111

2 5 years CAGR (FY07 – FY12) 4.2%

3 Consumption calculated by Commission based on the

CAGR over previous years consumption 7,409 8,686 9,726

4 Increase in consumption due to improved power supply

position 929 929

5 Total Industrial consumption 8,337 9,615 9,726

• Domestic – (LT –IA): TANGEDCO’s reply to data gaps shows increase

in Domestic consumption by 23%, which appears unfounded. To arrive at

a realistic consumption for this category, the Commission has used the

following approach.

To project number of domestic consumers for FY2013-14 to FY2015-16,

the Commission has calculated the average of growth rates of number of

consumers between FY 2010-11 to FY 2012-13. Based on this rate of

4.6%, the number of domestic consumers upto FY 2015-16 has been

projected.

The specific consumption (kWh/Annum) for this category has been

calculated based on actual sales and consumer data till FY 2011-12. The

specific consumption of FY12-13 has not been considered as it shows a

negative growth due to the load shedding imposed during the year. The

Commission has then calculated 5 years CAGR in the specific

consumption between FY 2007-08 to FY 2011-12. Based on this growth

rate of 3.8% and base specific consumption of FY 2011-12, the specific

consumptions of FY 2013-14 to FY 2015-16 have been calculated.

Based on the number of domestic consumers and specific consumption as

calculated above, the Commission has calculated the sales to domestic



June 2013

consumers for FY 2013-14 to FY 2015-16 as 20,002 MUs, 21,704 MUs

and 23,559 MUs respectively. The table below illustrates the calculation.

Table 154: LT Domestic consumption for the MYT control period FY2013-14 to 2015-16

Sl.

No. Particulars Base

Growth

rate 2013-14 2014-15 2015-16

1 No. Of Consumers in 2012-13 16494340 4.6% 1,72,57,767 1,80,56,528 1,88,92,259

2 Specific Consumption in 2011-

12

(kWh / Annum)

1,117 3.8% 1,159 1,202 1,247

3 Consumption (MUs) (1x2) 20,002 21,704 23,559

• The Commission maintains its stance on disallowance of sale to

Puducherry along with the corresponding revenue booked.

• Sale to Un-Metered categories: Based on the same approach as followed for

estimating consumption for FY 2012-13, the Commission has calculated the

consumption for Hut consumers and Agricultural consumers as follows.

• Hut category (LT I-B): The Commission has recalculated the

consumption for FY 2013-14 to FY 2015-16, based on the details in

Government Order (G.O.).Ms. No.2 dated 03-06-2011 issued by GoTN.

The Commission has considered the wattage as specified by the GoTN and

the hours as considered by TANGEDCO.

The Commission has made some reasonable assumptions to undertake this

calculation. To project the total number of hut connections for the control

period, the 3 year CAGR rate of 1.6% in hut connections between FY

2009-10 to FY 2012-13 has been considered. It has been assumed that an

equal number of CFL as distributed in FY 2012-13 will be distributed each

year till FY 2015-16. It has been assumed that 75,000 mixies, grinders and

fans will be distributed to hut consumers each year till FY 2015-16. Based

on these assumptions the hut consumption of 501MUs, 540 MUs and 580

MUs has been arrived at for FY 2013-14, FY 2014-15 and FY 2015-16

respectively.

Table 155: LT Hut consumption for the MYT control period FY2013-14 to 2015-16

Type of

Appliance

No. Of Hut connections Watt Hours Days

Consumption (MUs)

2013-14 2014-15 2015-16 2013-14 2014-15 2015-16

Light 1,300,159 1,232,067 1,162,878 40 6 365 113.89 107.93 101.87

TV 891,391 924,262 958,344 70 10 365 227.75 236.15 244.86

CF Lamp 178,088 267,132 356,176 11 6 365 4.29 6.44 8.58

Mixie 342,741 417,741 492,741 550 1 365 34.40 41.93 49.46

Grinder 342,817 417,817 492,817 300 2 156 32.09 39.11 46.13

Fan 331,390 406,390 481,390 61 12 365 88.54 108.58 128.62

RGGVY 373 373 373 40 12 365 0.07 0.07 0.07

Total Consumption 501 540 580



June 2013

• Agricultural category (LT IV): The Commission has recalculated the

consumption for FY 2013-14 to FY 2015-16 based on the same

methodology as adopted for calculating Agricultural consumption for FY

2012-13.

The Commission has re-estimated the agricultural consumption based on

the average capacity of pumpset in the middle of the year as calculated

below. It has been assumed that 50% of the connections and corresponding

capacity gets added in the first half of the year.

To estimate the number of consumers and load profile of connections for

the control period, the Commission has accepted the addition of 40,000

connections per year as submitted by TANGEDCO. To project load, the

Commission has considered the load of 5.4 HP per connection for FY

2012-13 and used the same for the entire control period.

To calculate the average consumption per HP per annum for the control

period, the Commission has relied on the actual average consumption data

for FY 2010-11 and FY 2011-12. The Commission has observed that

growth in average consumption in FY 2011-12 over FY 2010-11 was

4.7%, this rate has been used to project average consumption per HP per

annum for the control period and the average consumption has been

capped at the level of 966 kWh/ HP/Annum for the remaining two years of

the control period upto FY 2015-16. Based on the above assumptions the

consumption for FY 2013-14, FY 2014-15 and FY 2015-16 has been

worked out as 10,821 MUs, 11,039 MUs and 11,250 MUs respectively.

Table 156: LT Agricultural consumption for the MYT control period FY2013-14 to FY 2015-16

Sl.

No. Particulars 2013-14 2014-15 2015-16

1 No. of service connections at the end of the

year 2,076,898 2,116,898 2,156,898

2 YoY Increase 40,000 40,000 40,000

% added in the first half 50.0% 50.0% 50.0%

3 No. of service connections in the middle of the

year 2,056,898 2,096,898 2,136,898

4 Connected load in HP at the end of the year 11,317,028 11,534,988 11,752,948

5 YoY Increase 233,024 217,960 217,960

6 Connected load in HP at the middle of the year 11,200,516 11,426,008 11,643,968

7 Average capacity of pumpset in HP at the

middle of the year ( 6/3 ) 5.45 5.45 5.45

8 Average consumption in kWh /HP / Annum 966 966 966

9 Consumption in MUs ( 3 x 7 x 8 ) 10,821 11,039 11,250



June 2013

4.8 The Commission has mapped the growth in number of consumers and the load of

various consumer categories based on actual growth from FY 2007-08 till FY 2012-

13. For projecting the number of consumers for the control period, the Commission

has used the 5 years CAGR rate upto FY 2012-13, in cases where a negative growth is

observed in FY 2012-13 an appropriate rate has been assumed. For projecting the

consumer load for the control period the Commission observed that the load data as

given by TANGEDCO for FY 2012-13 varied drastically from the actuals of FY

2011-12. Hence the Commission has used 3years CAGR prior to FY 2012-13 for

projecting the load of all consumer categories. In cases where a negative growth is

observed an appropriate rate has been assumed.

4.9 Based on the above assumptions and revised calculations, the total sales as approved

by the commission for the Control period FY 2013-14 to FY 2015-16 is as follows.

Table 157: Sales as approved by the Commission for FY 2013-14 to FY 2015-16 (MUs)

Particulars 2013-14 2014-15 2015-16


I-A HT Industries 8,337 9,615 9,726

I-B Railway Traction 813 911 951

II-A Govt. Educational Inst. etc. 1,035 1,159 1,210

II-B Pvt. Educational Inst. etc. 256 287 300

III HT Commercial 1,626 1,951 2,074

IV Lift Irrigation 5 6 6

V Temporary supply 175 186 189

Total HT 12,247 14,114 14,455


I-A Domestic 20,002 21,704 23,559

I-B Huts 501 540 580

I-C LT bulk supply 10 11 11

II-A Public Lighting and Water Supply 1,750 1,951 2,037

II-B-1 Govt. Educational Inst. etc. 124 141 147

II-B-2 Pvt. Educational Inst. etc. 220 254 265

IIC Places of Public Worship 120 136 142

IIIA 1 Cottage and Tiny Industries 141 157 161

IIIA 2 Power Looms 863 993 1,017

IIIB L.T. Industries 4,837 5,385 5,622

IV L.T. Agriculture 10,821 11,039 11,250

V L.T. Commercial 5,521 6,427 6,834

VI Temporary supply 43 50 51

Total LT 44,953 48,787 51,674

Total HT + LT 57,199 62,901 66,129



June 2013

4.10 Therefore the sales as approved by the Commission for FY 2013-14 are 57,199 MUs,

for FY 2014-15 are 62,901 MUs and for FY 2015-16 are 66,129 MUs.

Energy Availability

4.11 TANGEDCO in its Petition projected the details of energy availability from FY 2013-

14 to FY 2015-16 based on the energy availability projections estimates for FY 2012-

13 and considering the historical trend of actual energy available. In this section the

Commission analyses the energy availability projections of TANGEDCO for the

second control period and accordingly approves the energy availability

Own Generation

4.12 The installed capacity of TANGEDCO generating stations, which as on March 2013

was 5792 MW, is expected to increase to 7592 MW by March 2014 with new thermal

stations expected to achieve commissioning. The energy availability with respect to

own generating stations is estimated considering energy available from existing

generating stations and new generating stations.

Thermal generating stations

4.13 The operational performance parameters such as plant load factor and auxiliary

consumption submitted by TANGEDCO in its current MYT petition are tabulated

below.

Table 158: Plant load factor and auxiliary consumption of existing thermal stations submitted by

TANGEDCO – (FY 2013-14 to FY 2015-16)

Name of the

power plant

Plant load factor Auxiliary Consumption

2013-14 2014-15 2015-16 2013-14 2014-15 2015-16

ETPS 37.87% 36.80% 35.20% 15.00% 15.00% 15.00%

TTPS 82.74% 84.31% 85.31% 8.50% 8.50% 8.50%

MTPS 89.01% 89.01% 88.77% 8.55% 8.55% 8.55%

NCTPS 89.15% 91.87% 91.64% 8.50% 8.50% 8.50%

TGTPS 75.35% 78.18% 78.20% 6.00% 6.00% 6.00%

KGTPS 73.80% 73.80% 71.14% 6.00% 6.00% 6.00%

BBGTPS 5.71% 5.71% 5.69% 0.99% 0.99% 1.00%

VGTPS - 1 78.47% 78.47% 75.63% 6.00% 6.00% 6.00%

VGTPS – 2 78.72% 73.66% 78.51% 6.00% 6.00% 6.00%

4.14 The net generation submitted by TANGEDCO from FY 2013-14 to FY 2015-16

based on the above performance parameters is tabulated below.



June 2013

Table 159: Net generation submitted by TANGEDCO for FY 2013-14 to FY 2015-16 (MUs)

Name of the power plant 2013-14 2014-15 2015-16

ETPS 987 959 920

TTPS 6963 7096 7200

MTPS 5990 5990 5990

NCTPS 4502 4639 4640

TGTPS 669 694 697

KGTPS 614 614 593

BBGTPS 59 59 59

VGTPS 1211 1173 1191

Total 20995 21224 21290

Plant load factors

4.15 As regards Target PLF to be achieved by various Thermal Power Stations,

Regulation-37 of TNERC Tariff Regulations, 2005 states as under:


The norms of operation for Thermal Generating Stations shall be as under:

(i) Target Availability for recovery of full capacity (fixed) charges:

(a) All Thermal Generating stations in Tamil Nadu except Ennore Thermal

Power Generating Station - 80%

(b) Ennore Thermal Power Generating Station (Till Renovation and

Modernization works in all units are completed) - 50%

(c) In respect of Generating Stations of Independent Power Producers -As per

PPA

(d) New Thermal Stations - 80%

(ii) Target Plant Load Factor for incentive –

(a) All the Thermal Power Generating Stations except the existing Stations of

IPPs covered under PPA- 80%

(b) Power Generating Stations of IPPs covered under Existing PPA

- As per PPA

4.16 The historical trend of actual PLF achieved by thermal stations from FY 2007-08 is

tabulated below.



June 2013

Table 160: Historical PLF of existing thermal generating stations

Name of the power

plant

2007-08 2008-09 2009-10 2010-11 2011-12 Average

ETPS 51.42% 49.17% 38.05% 35.44% 22.61% 39.34%

TTPS 86.50% 85.35% 77.91% 77.30% 85.60% 82.53%

MTPS 90.07% 87.88% 86.85% 82.42% 92.77% 88.00%

NCTPS 84.20% 86.52% 87.43% 81.74% 84.81% 84.94%

TGTPS 71.60% 75.48% 56.99% 68.74% 74.47% 69.46%

KGTPS 31.82% 82.16% 73.58% 19.51% 46.58% 50.73%

BBGTPS 3.95% 17.10% 7.78% 4.93% 2.81% 7.31%

VGTPS – Unit 1 72.00% 84.50% 82.52% 67.59% 78.94% 77.11%

VGTPS – Unit 2 42.38% 35.32% 56.16% 42.38% 44.06%

4.17 The Commission observed that the PLFs submitted by TANGEDCO for ETPS are in

line with the average PLF of last five years. TANGEDCO in response to data gaps has

replied that as ETPS is proposed to be decommissioned in a phased manner and it has

considered only 350 MW as available capacity from ETPS for the control period.

Accordingly arrived at the net generation after considering PLF of 37.87% for FY

2013-14. However, it is observed that in the calculation of fixed costs TANGEDCO

has not reduced corresponding GFA of ETPS. Hence, the Commission is considering

entire 450 MW as available capacity in the next control period. Also, considering the

performance of ETPS in FY 2011-12, the Commission approves a PLF of 25% for the

second control period (FY 2013-14 to FY 2015-16) for the purpose of energy

availability.

4.18 The average PLF for TTPS in the last five years was 82.53%. TANGEDCO has

proposed PLFs ranging from 82.74% to 85.31% in the second control period. Also,

TTPS has been able to achieve a PLF of 85.60% in FY 2011-12 and PLF of 89.19%

in FY 2012-13 (Upto February 2013). Based on historic performance, Commission

approves a PLF of 85.00%, higher than last five year average, for the second control

period for the purpose of energy availability.

4.19 TANGEDCO has proposed PLFs of around 89.00% for MTPS while the average PLF

of last five years was 88.00%. As PLF proposed by MTPS is in line with average

PLF, the Commission approves the PLF of 89.00% for MTPS as proposed by

TANGEDCO for the next control period for the purpose of energy availability.

4.20 The average PLF of last five years for NCTPS was 84.94%. However, NCTPS has

performed better in FY 2012-13 registering a PLF of 91.85% (upto February 2013).

TANGEDCO in its petition proposed higher PLFs ranging from 89.15% to 91.87%.

Considering the improved performance for NCTPS and TANGEDCO’s submission,

Commission approves PLF of 89% for NCTPS in the second control period for the

purpose of energy availability. .



June 2013

4.21 The average PLFs of gas generating stations are lower than 70% except for VGTPS –

unit 1. The reasons for lower PLFs were already mentioned in the earlier sections.

TANGEDCO proposed PLFs in the range of 71.14% to 78.72% except for BBGTPS.

Also, as per TANGEDCO Petition all the gas plants will be operational in FY 2012-

13 after attending the faults. Hence, the plants are expected to be available for the

entire duration of FY 2013-14 and Commission is of the view that there is no merit in

TANGEDO submission of PLFs being lower than the approved norms in the second

control period, according to Regulation-37 of TNERC Tariff Regulations, 2005.

Therefore Commission approves a load factor of 80% in the second control period for

the gas based stations for the purpose of energy availability. .

4.22 Due to non availability of gas BBGTPS is run using Naphtha fuel and is operated

usually during the peak hours. TANGEDCO has proposed a PLF of 5.71% for

BBGTPS during the second control period. Commission is of the view that the PLF

proposed by TANGEDCO is in line with its approval during the first control period

and accordingly accepts TANGEDCO’s submission. Further BBGTPS is normally

operated in condenser mode and not in generator mode and therefore low PLF as

envisaged is expected.

Auxiliary Consumption

4.23 The Commission observed that in accordance with Regulation-37 (v) of TNERC

Tariff Regulations, 2005 the auxiliary consumption is required to be approved as

percentage of Gross Generation. Regulation-37 (v) of TNERC Tariff Regulations,

2005 states as under:


The norms of operation for Thermal Generating Stations shall be as under:

…

(v) Auxiliary Energy Consumption

(a) Coal based generating station

With Cooling tower Without Cooling tower

(i) 200 MW Series 9.00% 8.50%

(ii) 500 MW Series

Steam driven Boiler Feed Pumps 7.50% 7.00%

Electrically driven BFPs 9.00% 8.50%

…”

(b)Gas-based and Naphtha based Generating Stations:

(i) Combined Cycle: 3%

(ii) Open Cycle: 1%



June 2013

4.24 TANGEDCO has proposed the auxiliary consumption for its thermal stations TTPS,

NCTPS and BBGTPS in line with the TNERC Tariff Regulations, 2005. Hence

Commission accepts the TANGEDCO proposal and approves auxiliary consumption

of 8.50% for TTPS and NCTPS while for BBGTPS Commission approves auxiliary

consumption of 0.99% during the second control period.

4.25 For MTPS, TANGEDCO proposed a nominally higher auxiliary consumption of

8.55% in comparison to the approved norm of 8.50% but has not provided adequate

explanation for the same in its Petition. Hence the Commission is approving the

auxiliary consumption of 8.50% even for MTPS in accordance to its tariff regulations.

4.26 For ETPS, TANGEDCO has proposed auxiliary consumption of 15% in line with the

Commission approved number in its last tariff order. ETPS is the oldest generating

plant of TANGEDCO and already served its useful life and on completion of major

R&M works, the Units of Ennore TPS have served further 5-10 years. Hence,

Commission relaxes the norm and approves the auxiliary consumption of 15% in line

with its last tariff order.

4.27 For gas based thermal stations Commission has relaxed its norm of auxiliary

consumption to 6% on account of installation of gas booster compressors in its tariff

order dated July 2010. TANGEDCO has proposed the auxiliary consumption in

accordance to the relaxed norms. In addition, based on the data submitted by

TANGEDCO the actual auxiliary consumption was around 6% in FY 2012-13 for gas

based thermal stations. Hence, Commission approves the auxiliary consumption of

6% for gas based stations in second control period.

Table 161: Plant load factor and auxiliary consumption of existing thermal stations approved by

Commission – (FY 2013-14 to FY 2015-16)

Name of the

power plant


2013-14 2014-15 2015-16 2013-14 2014-15 2015-16

ETPS 25.00% 25.00% 25.00% 15.00% 15.00% 15.00%

TTPS 85.00% 85.00% 85.00% 8.50% 8.50% 8.50%

MTPS 89.00% 89.00% 89.00% 8.50% 8.50% 8.50%

NCTPS 89.00% 89.00% 89.00% 8.50% 8.50% 8.50%

TGTPS 80.00% 80.00% 80.00% 6.00% 6.00% 6.00%

KGTPS 80.00% 80.00% 80.00% 6.00% 6.00% 6.00%

BBGTPS 5.71% 5.71% 5.71% 0.99% 0.99% 0.99%

VGTPS - 1 80.00% 80.00% 80.00% 6.00% 6.00% 6.00%

VGTPS – 2 80.00% 80.00% 80.00% 6.00% 6.00% 6.00%

4.28 The net generation submitted by TANGEDCO and approved by the Commission from

FY 2013-14 to FY 2015-16 is tabulated below.



June 2013

Table 162: Net generation approved by the Commission for FY 2013-14 to FY 2015-16 (MUs) – Existing

thermal stations

Name of the

power plant

FY 2013-14 FY 2014-15 FY 2015-16


ETPS 987 652 959 652 920 653

TTPS 6963 7154 7096 7154 7200 7173

MTPS 5990 5992 5990 5992 5990 6009

NCTPS 4502 4494 4639 4494 4640 4507

TGTPS 669 711 694 711 697 713

KGTPS 614 665 614 665 593 667

VGTPS 1211 1232 1173 1232 1191 1235

BBGTPS 59 59 59 59 59 59

Total 20995 20959 21224 20959 21290 21016

Hydro generating stations

4.29 TANGEDCO has projected the hydro generation considering a PLF of 28.39%,

29.24% and 32.16% for FY 2013-14, FY 2014-15 and FY 2015-16 respectively. In

addition, TANGEDCO has assumed auxiliary consumption of 1% in accordance to

TNERC tariff regulations. However, in its Petition TANGEDCO has not provided any

adequate explanation for the basis of the assumed PLF.

4.30 In the last order Commission has approved the hydro generation excluding the

generation from Kadamparai PSHES by considering last 8 year average. In this order

also Commission adopts a similar approach for the determination of hydro generation

and approves it based on six years average.

4.31 The actual hydro generation from FY 2004-05 has been given in below table. While

arriving at the average hydro generation of 4844 MUs, the Commission has not

considered the hydro generation during FY 2006-08 and FY 2007-08 as in those years

there were exceptionally high rainfalls and during FY 2012-13 as there was severe

drought in that year. For the second control period, Commission has considered the

average hydro generation of 4844 MUs as energy availability from hydro power

plants excluding Kadamparai PSHES.

Table 163: Actual hydro generation excluding Kadamparai PSHES (MU)

Year

Hydro generation

excluding Kadamparai

PSHES

FY 2004-05 4153

FY 2005-06 5531

FY 2008-09 5040

FY 2009-10 5122

FY 2010-11 4515

FY 2011-12 4701

Average 4844



June 2013

4.32 TANGEDCO has filed the additional energy required for Kadamparai PSHES in the

second control period based on historical actual energy requirement for Kadamparai

PSHES. Commission approves the additional energy requirement in the second

control period based on the actual additional energy requirement in the first control

period.

Table 164: Kadampari generation and power consumption (MUs)

Source FY 2010-11 FY 2011-12 FY 2012-13 Average

Generation Mode 290 506 309

Pump Mode 332 534 335

Additional Requirement 42 28 26 32

4.33 The net hydro energy and additional energy requirement for Kadamparai PSHES

approved by the Commission during the second control period is tabulated below:

Table 165: Net hydro generation and additional energy requirement approved by the Commission for

Kadamparai PSHES (MUs)



Net Hydro generation

excluding Kadamparai 5207 4386 5211 4386 5732 4386

Additional energy required

for Kadamparai PSHES 28 32 28 32 28 32

Wind Generation

4.34 TANGEDCO has submitted net available energy of 28 MUs from Wind Mills from

FY 2013-14 to FY 2015-16.

4.35 Based on actual available energy from TANGEDCO’s wind mills during first control

period, Commission approves energy availability of 12 MUs for second control period

Table 166: Approved energy availability from wind mills (MUs)



Wind Generation 28 12 28 12 28 12

New Generating Stations

4.36 TANGEDCO in its Petition has submitted CoD for new generating stations as 1st

March 2013 for MTPS Stage III, 1st April 2013 for NCTPS Stage-II (unit 2) and 1

st

May 2013 for NCTPS stage-II (unit 1). However, these units have not been

commissioned as on date and TANGEDCO in response to data gaps has further

revised the commissioning dates as per below table:



June 2013

Table 167: Revised CoD of the new generating stations

Name of the Project Expected date of

commissioning

Revised Submission

Mettur Thermal Power Project -

Stage 3 - ( 1x 600 MW)

March 2013 June 2013

North Chennai Thermal Power

Project –

Stage-II ( 2x600 MW)

Unit-II - April 2013

Unit-I – May 2013

Unit-II - June 2013

Unit-I – August 2013

Ennore Expansion* December 2015 December 2015

*Project yet to be awarded

Table 168: Plant load factor and auxiliary consumption of new generation stations – as per TANGEDCO

Petition

Name of the power

plant Plant load factor Auxiliary Consumption

2013-14 2014-15 2015-16 2013-14 2014-15 2015-16

NCTPS – Unit 1 70.71% 80.02% 86.04% 8.50% 8.50% 8.50%

NCTPS – Unit 2 70.71% 80.02% 86.04% 8.50% 8.50% 8.50%

MTPS – Stage III 78.21% 83.43% 88.64% 9.00% 9.00% 9.00% Ennore Expansion 80.00% 8.50%

4.37 Commission approves the PLF of 80% in accordance with its tariff regulations during

the financial year of commissioning. In the subsequent years, the plants are expected

to have stabilized and perform at similar levels of the existing coal based thermal

stations. Hence, Commission approves the PLF of 85% for subsequent years for

calculation of energy availability.

4.38 As per the clause 37 (vi) of the TNERC Tariff Regulations, 2005 stabilization period

is defined as follows:

The stabilization period of a unit shall be reckoned commencing from the date of

commercial operation of that unit as follows

(a) coal-based and lignite-fired Generating Stations -180 days

(b) Gas turbine / combined Generating Stations - 90 days

4.39 Also, the clause 37 (v) of TNERC Tariff Regulations 2005 gives a relaxation on the

auxiliary consumption during the stabilization period. The respective clause of

TNERC tariff regulation is given below:

(d) During stabilization period, normative auxiliary consumption shall be reckoned at

0.50 percentage point more than the norms indicated at (a), (b) and (c) above.

4.40 The Commission has not fixed the norms for auxiliary consumption for 600 MW

series coal based generation stations. However, based on the norms for 500 MW

series and the regulations, Commission approves 9.00% as auxiliary consumption

during the first six months (stabilization period) after Commissioning and at 8.50%

after the stabilization period.



June 2013

Table 169: Plant load factor and auxiliary consumption of new thermal stations approved by Commission

– (FY 2013-14 to FY 2015-16)

Name of the power

plant


2013-14 2014-15 2015-16 2013-14 2014-15 2015-16

NCTPS – Unit 1 80.00% 85.00% 85.00% 8.88% 8.50% 8.50%

NCTPS – Unit 2 80.00% 85.00% 85.00% 8.83% 8.50% 8.50%

MTPS – Stage III 80.00% 85.00% 85.00% 8.83% 8.50% 8.50%

Ennore Expansion 80.00% 9.00%

4.41 The net generation submitted by TANGEDCO and approved by the Commission from

FY 2013-14 to FY 2015-16 is tabulated below.

Table 170: Net generation approved by the Commission for FY 2013-14 to FY 2015-16 (MUs) – New

Thermal stations

Name of the power

plant

FY 2013-14 FY 2014-15 FY 2015-16


NCTPS – Stage II 6387 5429 7774 8176 8275 8198

MTPS – Stage III 3587 2878 3990 4088 4240 4099

Ennore Expansion 1058 1049

Total 9974 8306 11764 12264 13573 13347


Central Generating Stations (CGS)

4.42 The allocation of firm power to TANGEDCO from central generating stations is

tabulated below:

Table 171: TANGEDCO share in central generating stations

Power Station

Installed

Capacity (in

MW)

Firm Share

(in MW) Firm Share (%)

Total share

including

unallocated

power (%)*

Existing Stations

Neyvelli TS - I 600 600 100.00% 100.00%

Neyvelli TS - II - Stage 1 630 176 27.94% 30.31%

Neyvelli TS - II - Stage 2 840 265 31.55% 33.90%

Neyvelli TS - I Expansion 420 193 45.95% 53.84%

Ramagundam super thermal power

station I & II 2100 470 22.38% 26.09%


station III 500 118 23.60% 27.40%

Simhadri Stage 2 , Units 3 500 95 19.00% 22.84%

Simhadri Stage 2 , Units 4 500 95 19.00% 22.84%

NTPC-TNEB JV - Unit 1 (Vallur) 500 347 69.40% 75.00%

Talcher - II 2000 477 23.85% 25.22%



June 2013

Power Station

Installed

Capacity (in

MW)

Firm Share

(in MW) Firm Share (%)

Total share

including

unallocated

power (%)*

Madras APS 440 328 74.55% 75.36%

Kaiga APS 880 229 22.27% 26.08%

Sub Total 9910 3393

New Stations

NTPC – TNEB JV - Unit 2

(Vallur) 500 347 69.40%

NTPC – TNEB JV - Unit 3

(Vallur) 500 347 69.40%

Kudankulam APS - Unit 1 1000 463 46.25%

Kudankulam APS - Unit 2 1000 463 46.25%

PFBR Kalpakkam 500 167 33.40%

Neyveli TS - II Expnasion Unit I 250 163 65.20%

Neyveli TS - II Expansion Unit II 250 162 64.80%

NLC-TNEB - Tuticorin Unit 1 500 194 38.70%

NLC-TNEB - Tuticorin Unit 2 500 194 38.70%

Sub Total 5000 2500

Total 14910 5893

*Total share from CGS including unallocated power as per SRPC March 2013 monthly

report

4.43 It can be observed that TANGEDCO has a firm allocation of 3393 MW from existing

CGS and this allocation is expected to increase by 2500 MW in the second control

period with most of the capacity additions happening in FY 2013-14.

4.44 TANGEDCO has revised the date of CoD of new CGS stations based on the latest

progress and the revised dates are as tabulated below. It is understood that the revised

dates submitted by TANGEDCO are based on the status as on date for each of the

stations, Commission has considered the revised submission for the purpose of

calculation of energy availability..

Table 172: Revised CoD of new CGS stations

Name of the new CGS Revised Submission

NTPC – TNEB JV - Unit 2 (Vallur) June-13

NTPC – TNEB JV - Unit 3 (Vallur) October-13

Kudankulam APS - Unit 1 September-13

Kudankulam APS - Unit 2 October-13

PFBR Kalpakkam June-14

Neyveli TS - II Expansion Units I March-14

Neyveli TS - II Expansion Units II September-14

NLC-TNEB - Tuticorin Unit 1 December-13

NLC-TNEB - Tuticorin Unit 2 March-14



June 2013

4.45 The plant load factors of the existing CGS stations for FY 2010-11 and FY 2011-12

are assumed based on their historical performance obtained from SRPC reports. The

historical PLFs and assumed PLF for the CGS stations is tabulated below.

Table 173: Assumed PLF for the second control period

Name of the CGS Stations 2010-11 2011-12 Assumption

Neyvelli TS - I 73.80% 75.67% 75.00%

Neyvelli TS - II 83.40% 85.87% 85.00%

Neyvelli TS - I Expansion 81.42% 82.47% 82.00%

Ramagundam super thermal power station I & II 90.27% 93.07% 90.00%

Ramagundam super thermal power station III 90.27% 93.07% 90.00%

Simhadri Stage 2 , Units 3 & 4

89.79% 85.00%

Talcher - II 86.14% 85.00% 85.00%

Madras APS 58.09% 65.10% 60.00%

Kaiga APS 65.86% 67.49% 65.00%

4.46 For the new generating stations the PLF assumption and the basis are as given below:

i. Thermal stations – 80% during the financial year of commissioning and later

85% as per CERC tariff regulations, 2009

ii. Nuclear power stations – 50% during the financial year of commissioning and

later 60% (PLF that was considered for Madras APS).

4.47 The auxiliary consumption for all the thermal stations has been taken as per CERC

Tariff Regulations, 2009 and for nuclear stations the auxiliary consumption is

assumed to be 10%.

4.48 The station wise PLF and auxiliary consumption assumed for central generating

stations for arriving at the energy availability is tabulated below:

Table 174: PLFs and Auxiliary consumption considered by the Commission for CGS stations

Power Station Plant load factors Auxiliary Consumption

2013-14 2014-15 2015-16 2013-14 2014-15 2015-16

Existing Stations

Neyvelli TS - I 75.00% 75.00% 75.00% 12.00% 12.00% 12.00%

Neyvelli TS - II 85.00% 85.00% 85.00% 10.00% 10.00% 10.00%

Neyvelli TS - I Expansion 82.00% 82.00% 82.00% 9.50% 9.50% 9.50%


station I & II 90.00% 90.00% 90.00% 8.50% 8.50% 8.50%


station III 90.00% 90.00% 90.00% 8.50% 8.50% 8.50%

Simhadri Stage 2 85.00% 85.00% 85.00% 8.50% 8.50% 8.50%

NTPC-TNEB JV - Unit 1 (Vallur) 85.00% 85.00% 85.00% 8.50% 8.50% 8.50%

Talcher - II 85.00% 85.00% 85.00% 10.50% 10.50% 10.50%

Madras APS 60.00% 60.00% 60.00% 10.00% 10.00% 10.00%



June 2013

Power Station Plant load factors Auxiliary Consumption

2013-14 2014-15 2015-16 2013-14 2014-15 2015-16

Kaiga APS 65.00% 65.00% 65.00% 10.00% 10.00% 10.00%

New Stations

NTPC – TNEB JV - Unit 2 (Vallur) 80.00% 85.00% 85.00% 8.50% 8.50% 8.50%

NTPC – TNEB JV - Unit 3 (Vallur) 80.00% 85.00% 85.00% 8.50% 8.50% 8.50%

Kudankulam APS - Unit 1 50.00% 60.00% 60.00% 10.00% 10.00% 10.00%

Kudankulam APS - Unit 2 50.00% 60.00% 60.00% 10.00% 10.00% 10.00%

PFBR Kalpakkam

50.00% 60.00% 10.00% 10.00% 10.00%

Neyveli TS - II Expansion Unit I 80.00% 85.00% 85.00% 8.50% 8.50% 8.50%

Neyveli TS - II Expansion Unit II 80.00% 85.00% 85.00% 8.50% 8.50% 8.50%

NLC-TNEB - Tuticorin Unit 1 80.00% 85.00% 85.00% 8.50% 8.50% 8.50%

NLC-TNEB - Tuticorin Unit 2 80.00% 85.00% 85.00% 8.50% 8.50% 8.50%

4.49 Based on the total share in the CGS plants, PLFs and auxiliary consumptions as per

above table and revised CoD submitted by TANGEDCO for new plants, Commission

has determined the net energy available from the CGS stations. The summary of net

energy approved by the Commission and filed by TANGEDCO in its petition is

tabulated below:

Table 175: Summary of energy availability from CGS stations approved by Commission (MUs)

Central Generation

Stations FY 2013-14 FY 2014-15 FY 2015-16

Petition Commissio

n Petition Commission Petition

Commissio

n

NTPC SR (I&II) 4164 3952 4164 3952 4164 3963

NTPC SR III 1074 988 1074 988 1074 991

NLC TS - I 2937 3469 2937 3469 1469 3478

NLC TS - II 3450 3188 3450 3188 3450 3196

NLC TS Expansion I 1749 1470 1749 1470 1749 1474

NTPC Talcher 3567 3361 3567 3361 3567 3370

NTPC Simhadri 638 1556 678 1556 678 1560

MAPS 1986 1568 1986 1568 1986 1573

KAIGA 1278 1176 1278 1176 1278 1179

NTPC Dadri 599 0 638 0 678 0

NTPC Vallur 4676 4955 6704 7092 7141 7112

Kudunkulum 2426 1663 4316 4376 5544 4388

PFBR Kalpakkam 0 0 0 494 0 792

NLC TS - II Expansion 1449 89 1546 1752 1642 2220

NLC - Tuticorin 257 518 1219 2643 1300 2651

Total 30250 27954 35307 37086 35721 37948



June 2013


4.50 TANGEDCO in its Petition has included power purchase quantum only from ST-

CMS, ABAN power and Penna and stated that they do not intend to procure power

from the rest of the IPPs as they will remain un-despatched under the merit order

principle.

4.51 TANGEDCO did not provide any basis for projection of quantum from IPPs in its

Petition. In its response to data gaps TANGEDCO has submitted the PLFs

(corresponding to net generation) considered for projection of energy availability.

However, TANGEDCO again failed to provide any valid explanation for the

consideration of those PLFs.

4.52 In the absence of valid explanation, Commission has projected the energy availability

based on actual numbers for FY 2007-08 to FY 2011-12. The Commission arrived at

the energy availability after considering the average energy available from these IPPs

in the past five financial years

Table 176: Actual energy available from IPPs - Historical data (MUs)

IPPs 2007-08 2008-09 2009-10 2010-11 2011-12 Average

GMR 1,132 1,362 1,145 875 858 1,074

Samalpatti 517 691 481 378 292 472

PPN 2,120 2,147 2,260 2,496 1,491 2,103

Madurai 511 663 467 353 282 455

ST-CMS 1,689 1,638 1,655 1,653 1,688 1,665

ABAN 852 806 677 820 760 783

Penna 358 338 339 370 360 353

Sub Total 7,179 7,645 7,024 6,945 5,731 6,905

4.53 In response to data gaps, TANGEDCO has replied that PPA with M/s GMR is upto

15th February 2014 and for M/s SPC it is upto 22

nd February 2016. Hence,

Commission has considered the energy availability from these plants only upto the

dates till PPA exists.

4.54 The summary of net energy availability approved by the Commission and filed by

TANGEDCO in the Petition is tabulated below.

Table 177: Summary of energy availability approved by the Commission (MUs)

IPPs FY 2013-14 FY 2014-15 FY 2015-16


GMR 0 945 0 0 0 0

Samalpatti 0 472 0 472 0 433

PPN 0 2103 0 2103 0 2103

Madurai 0 455 0 455 0 455

ST-CMS 1819 1665 1844 1665 1869 1665

ABAN 375 783 375 783 375 783

Penna 759 353 810 353 810 353



June 2013

Total 2953 6775 3029 5830 3054 5791

4.55 Though Commission has estimated the energy availability from IPPs, the energy

despatch from these IPPs will be arrived based on merit order dispatch principle.

Captive/ Cogeneration and Non-Conventional energy sources

4.56 TANGEDCO has submitted that it has entered into agreements with some of the

private energy generators owning captive generating sources and cogeneration

sources, which pump their surplus power into the Grid. TANGEDCO further

submitted that the power purchase quantum has been estimated on the basis of

quantity of power likely to be made available for sale based on prevailing trends. The

Power Purchase Quantum projected from various sources from FY 2013-14 to FY

2015-16 is tabulated below:

Table 178: Energy availability from Captive and Non conventional energy sources – As submitted by

TANGEDCO (MUs)

Source 2013-14 2014-15 2015-16

Captive 719 755 793

Wind 5320 5586 5866

Biomass 799 839 881


New - Cogeneration

Plants 0 0 0

Solar 208 768 769

Total 9,608 10,997 11,434

4.57 For energy availability from biomass plants, Commission has observed a significant

increase in energy availability in FY 2012-13 compared to FY 2011-12. However in

reply to data gaps TANGEDCO has revised the energy availability from biomass

plants to 11 MUs in FY 2012-13

4.58 In response to data-gaps, TANGEDCO has provided the actual energy purchased

from wind, solar, captive and cogeneration in FY 2012-13. Hence for renewable

energy plants and CPP, Commission has approved the energy availability equivalent

to actual procured in FY 2012-13.

4.59 For new cogeneration plants, TANGEDCO has provided the date of CoD as a

response to data gaps. The CoD submitted by TANGEDCO is tabulated below.

Commission has estimated the energy availability from these plants considering the

CoD submitted by TANGEDCO and assuming a PLF of 55% and auxiliary

consumption of 9% in accordance to TNERC tariff order for cogeneration plants.

Table 179: CoD of Cogeneration plants submitted by TANGEDCO

Capacity CoD

45 MW (3 projects of 15 MW ) June 2013

51 MW (2 projects of 18 MW and 1

project of 15 MW) July 2013



June 2013

Capacity CoD

42 MW (3 projects of 15 MW and 1

project of 12 MW August 2013

45 MW (3 projects of 15 MW) September 2013

4.60 The summary of energy availability estimated by the Commission and filed by

TANGEDCO for captive and non conventional sources is given below.

Table 180: Summary of energy availability approved by the Commission from captive and renewable

energy sources (MUs)

Renewable Energy

Sources

FY 2013-14

FY 2014-15

FY 2015-16


Captive 719 595 755 595 793 595

Wind 5320 7145 5586 7145 5866 7145

Biomass 799 11 839 11 881 11

Cogeneration 2562 1428 3049 1428 3126 1428

New - Cogeneration

Plants 0 502 0 802 0 805

Solar 208 16 768 16 769 16

Total 9608 9697 10997 9997 11434 10000

From Other Sources

4.61 TANGEDCO in its Petition has proposed purchase of power from trading and NTPC

NVVN for the second control period. However, TANGEDCO has not provided any

basis for its projection from traders-bilateral in its Petition. For NTPC-NVVN

TANGEDCO has projected the energy availability based on actual energy purchase

during FY 2011-12.

4.62 In response to data gaps, TANGEDCO has provided the information on case-1

bidding from which the power is likely to be available. The details of case-1 bidding

submitted by TANGEDCO are tabulated below. The Commission has considered the

availability from these sources as per the MTOA granted by PGCIL.

Supplier/ Source Offered Capacity-(MW) Current Status

M/s NETS through

Lanco Anpara Power

Ltd, U.P

100 PGCIL has granted MTOA

for the period from

16.06.2013 to

31.05.2016

M/s Jindal through OP

Jindal Super Thermal

Power Station,

Chattisgarh


for the period from

16.06.2013 to 30.11.2015

M/s Adani through

Mundra Power Plant,

Gujarat


for the period from

16.06.2013 to 31.12.2015



June 2013

4.63 In reply to data gaps, Commission requested TANGEDCO to provide the break-up of

trading sources proposed by it. However, TANGEDCO has failed to provide a further

detailed break-up of the sources from which this power quantum was being procured.

In the absence of this information Commission disallows the power purchase

proposed by TANGEDCO under traders-bilateral.

4.64 In response to information sought by the Commission TANGEDCO has provided the

actual power purchase during FY 2012-13. Hence, for NTPC NVVN (bundled solar

power) Commission approves the energy availability for second control period

equivalent to power procured in FY 2012-13.

4.65 The summary of the power purchase quantum from other sources filed by

TANGEDCO and approved by the Commission is tabulated below.

Table 181: Summary of power purchase quantum approved from other sources (MUs)

Other Sources

FY 2013-14

FY 2014-15

FY 2015-16


Trading - Bilateral &

Exchange 1413 0 804 0 933 0

Case 1 - Bidding 0 3468 0 4380 0 3370

NTPC NVVN * 694 35 694 35 694 35

Total 2107 3503 1498 4415 1627 3405

*Power shown under NTPC-NVVN is bundled solar power. TANGEDCO has projected it

considering actual of FY 2011-12 which also include trading power. Commission while

approving has corrected this error considering actual bundled power procured in FY 2012-

13.

4.66 Based upon the above discussion in respect of individual sources, the total energy

available from all sources during the second control period (FY 2013-14 to FY 2015-

16) as submitted in the Petition and as approved in the Order is tabulated below:

Table 182: Summary of energy availability approved by the Commission for the second control period

(FY 2013-14 to FY 2015-16) (MUs)

Source 2013-14 2014-15 2015-16




Ennore Thermal Power Station 987 652 959 652 920 653

Tuticorin Thermal Power Station 6963 7154 7096 7154 7200 7173

Mettur Thermal Power Station 5990 5992 5990 5992 5990 6009

North Chennai Thermal Power

Station 4502 4494 4639 4494 4640 4507

Sub Total 18442 18292 18684 18292 18749 18342


Tirumokottai Kovilkalappal Gas

Power Plant 669 711 694 711 697 713

Kuttalum Gas Power Plant 614 665 614 665 593 667



June 2013

Source 2013-14 2014-15 2015-16


Valathur Gas Power Plant 1211 1232 1173 1232 1191 1235

Basin Bridge Gas Power Plant 59 59 59 59 59 59

Sub Total 2554 2668 2541 2668 2540 2675



5768 4844 5801 4844 6353 4844


Tirunelveli Hydro Generation

Circle

Kadamparai Hydro generation

circle

Wind Mills 0 12 0 12 0 12

Sub Total - Existing Stations 26764 25816 27026 25816 27643 25873

New Stations

North Chennai TPS Stage - II 6387 5429 7774 8176 8275 8198

Mettur Stage - III 3587 2878 3990 4088 4240 4099

Ennore Expansion

1058 1049

Sub Total 9974 8306 11764 12264 13573 13347

Total - Own Generating Stations 36738 34122 38790 38079 41216 39219


NTPC SR (I&II) 4164 3952 4164 3952 4164 3963

NTPC SR III 1074 988 1074 988 1074 991

NLC TS - I 2937 3469 2937 3469 1469 3478

NLC TS - II 3450 3188 3450 3188 3450 3196

NLC TS Expansion I 1749 1470 1749 1470 1749 1474

NTPC Talcher 3567 3361 3567 3361 3567 3370

NTPC Simhadri 638 1556 678 1556 678 1560

MAPS 1986 1568 1986 1568 1986 1573

KAIGA 1278 1176 1278 1176 1278 1179

NTPC Dadri 599 0 638 0 678 0

NTPC Vallur 4676 4955 6704 7092 7141 7112

Kudunkulum 2426 1663 4316 4376 5544 4388

PFBR Kalpakam 0 0 0 494 0 792

NLC TS - II Expansion 1449 89 1546 1752 1642 2220

NLC - Tuticorin 257 518 1219 2643 1300 2650.72

Sub Total 30250 27954 35307 37086 35721 37948

IPPs

GMR 0 945 0 0 0 0

Samalpatti 0 472 0 472 0 433

PPN 0 2103 0 2103 0 2103

Madurai 0 455 0 455 0 455

ST-CMS 1819 1665 1844 1665 1869 1665

ABAN 375 783 375 783 375 783

Penna 759 353 810 353 810 353

Sub Total 2953 6775 3029 5830 3054 5791

Renewable Energy Sources and



June 2013

Source 2013-14 2014-15 2015-16


CPP

Captive 719 595 755 595 793 595

Wind 5320 7145 5586 7145 5866 7145

Biomass 799 11 839 11 881 11

Cogeneration 2562 1428 3049 1428 3126 1428

New - Cogeneration Plants 0 502 0 802 0 805

Solar 208 16 768 16 769 16

Sub Total 9608 9697 10997 9997 11434 10000

Other Sources

Trading - Bilateral & Exchange 1413 0 804 0 933 0

Case 1 - Bidding 0 3468 0 4380 0 3370

UI 0 0 0 0 0 0

NTPC NVVN 694 35 694 35 694 35

Sub Total 2107 3503 1498 4415 1627 3405

Total - Other Power Purchase 44917 47930 50831 57329 51836 57144

Grand Total 81656 82051 89621 95408 93052 96364

Renewable Purchase Obligation

4.67 The Commission in first Amendment in Renewable Energy Purchase Obligation

Regulations, 2010 has fixed the RPO of 9% for all sources of Renewable Energy put

together and 0.05% for Solar separately.

4.68 As regards target of RPO for future years, Tamil Nadu Electricity Regulatory

Commission (Renewable Energy Purchase Obligation) Regulations, 2010 states as

under:

“2.If the RPO for any of the year is not specified by the Commission, the RPO

specified for the previous year shall be continued beyond the period till any revision

is effected by the Commission in this regard.”

4.69 From FY 2012-13, the Commission has not prescribed any RPO Target. Therefore,

the Commission has considered same RPO Obligations of 9% as fixed in its

Renewable Energy Purchase Obligation Regulations, 2010 for second control period

from FY 2013-14 to FY 2015-16

4.70 Accordingly, the Commission has calculated the quantum to be purchased through

RPO. The Commission has applied the above mentioned percentages of RPO from

FY 2013-14 to FY 2015-16 on the energy required determined for respective years in

this Order.

Table 183: Renewable energy purchase requirement from FY 2013-14 to FY 2015-16 (MUs)


Energy Requirement (TN Periphery) 67515 73919 77374



June 2013


RPO% from all sources 9.00% 9.00% 9.00%

RPO% from solar 0.05% 0.05% 0.05%

Required purchase from renewable

energy sources (MU) 6076.37 6652.70 6963.67

Required purchase from solar energy

sources (MU) 33.76 36.96 38.69

Energy Balance and Distribution Loss

4.71 Commission in its first order on Multi Year Tariff determination dated 31st July 2010

has approved transmission and distribution losses together and has set a loss reduction

strategy for reduction of T&D losses.

4.72 Also, Commission has initiated the suo-motto proceedings against TANGEDCO for

non compliance in the matter of T&D loss determination as directed by it and the

Hon’ble APTEL. The Commission has in the absence of scientific data for loss

determination, fixed the T&D loss level at 16.4% for FY 2013-14 and has clarified

that it shall assume loss percentage at 16% and 15.6% for FY 2014-15 and FY 2015-

16 respectively, if the necessary data is not furnished by TANGEDCO.

The relevant extracts of that order are given below:

“The Commission in its Order No.1 of 2012 dated 30-3-2012, had adopted the T&D

loss of 17.6% for 2010-11 and 17.2% for 2011-12. Commission adopted T&D loss of

16.80% for 2012-13. By the same analogy, T&D loss of 16.40% is approved for 2013-

14. As and when the TANGEDCO comes out with the scientific study on T&D loss as

specified in the Regulations, the Commission may review and refix the T&D loss

norms subject to prudent check. If no study report is submitted for consideration of

the Commission, T&D loss for FY 2014-15 shall be reckoned as 16% and for FY

2015-16 shall be reckoned as 15.6%. Out of the above T&D loss limit, the

distribution loss shall be arrived at after deducting the transmission loss as approved

by the Commission in the respective tariff order.

4.73 Considering the Commission’s order on T&D losses, the Commission approves the

T&D loss trajectory as tabulated below. Based on the approved distribution losses,

Commission has further estimated the 33 kV, 22 kV, 11 kV and LT losses

Table 184: T&D Loss trajectory set by the Commission for the second control period

Particulars 2013-14 2014-15 2015-16

T&D Loss level in % 16.40% 16.00% 15.60%

Transmission Loss % 2.70% 2.70% 2.70%

Distribution Loss% 13.70% 13.30% 12.90%

33 kV Losses 0.66% 0.64% 0.62%

22 kV Losses 2.76% 2.68% 2.60%

11 kV Losses 2.87% 2.78% 2.70%

LT Losses 10.20% 9.90% 9.60%



June 2013

4.74 Hence Commission has arrived at the energy requirement for TANGEDCO

considering the approved sales and losses as per Suo-Motto order on distribution

losses dated 4th June 2013. In addition, from this order Commission is treating the

distribution loss and transmission loss separately. For arriving at the sales below 33

kV, at 110 kV and at 230 kV, Commission has relied on the percentages arrived based

on the data provided by TANGEDCO. The energy balance in distribution periphery

and energy required by TANGEDCO for the second control period are tabulated

below.

4.75 The energy balance shown is considering total energy wheeled in the distribution

system while energy requirement has been arrived considering approved sales and

losses.

Table 185: Energy Balance in distribution periphery




Wheeled Units below 33 kV 8610 8692 9184




Table 186: Energy required by TANGEDCO at TN Periphery during the control period







110 kV Sales (MU) 3067 3373 3546

110 kV Losses (%) 1.90% 1.90% 1.90%

110 kV Losses (MU) 1259 1378 1443

Energy Input at 110 kV 66254 72535 75921

230 kV Sales (MU) 721 793 834

230 kV Losses (%) 0.80% 0.80% 0.80%

230 kV Losses (MU) 540 591 619

Energy input at TN Periphery (MU) 67515 73919 77374

4.76 Commission reiterates its direction given to TANGEDCO in order on Suo-Motto

Petition on T&D losses.

a) TANGEDCO shall conduct a third party scientific study to arrive at the reasonable consumption of unmetered services and thereby the technical

losses of their network in the following manner.

i. DT metering with AMR facility shall be provided atleast in one feeder



June 2013

feeding agricultural services predominantly in each circle of the

TANGEDCO. Similar metering shall be installed/made available at the

Sub-Station end of the 11KV / 22KV feeders.

ii. Similar arrangements may be made to measure the consumption of Hut

Services.

iii. To calculate the LT line loss, similar DT metering and feeder metering

shall be done atleast in one feeder which has considerable LT network

with 100% consumer metering.

iv. The online measurement taken for a period of one year shall be used to

arrive at the voltage wise T&D losses for the respective FY. Such data

shall be submitted once in every 2 months to the Commission starting from

October 2013.

Fixed Expenses

4.77 In this section expenses related to fixed cost for the second control period (FY 2013-

14 and FY 2015-16) will be approved by the Commission.

Operation and Maintenance Expenses

4.78 During the true-up and performance review of expenses for first control period it was

observed that the O&M expenses for TANGEDCO have increased while those of

TANTRANSCO have decreased. TANGEDCO has clarified that one of the reasons

for this variation is due to segregation of accounts.

4.79 However TN Power utilities have clarified in their current MYT Petition that they

have submitted the actual expenses based on their audited accounts. Also,

TANGEDCO in its Petition has submitted that it was unbundled from the erstwhile

TNEB only on 1st November 2010 and it is difficult for it to derive the O&M

expenses pertaining to transmission activities for the last 5 years. Hence, it has

projected the expenses from FY 2012-13 based on the expenses for the FY 2010-11

and FY 2011-12

4.80 It is pertinent to mention that in the process of the approval of the expenses the

Commission is guided by following regulations

Regulation-25 of TNERC Tariff Regulations, 2005 :


4. The operation and maintenance expenses shall be derived on the basis of

actual operation and maintenance expenses for the past five years previous to

current year based on the audited Annual Accounts excluding abnormal

operation and maintenance expenses, if any, after prudence check by the



June 2013

Commission. The Commission may, if considered necessary engage

Consultant / Auditors in the process of prudence check for correctness.

5. The average of such normative operation and maintenance expenses after

prudence check shall be escalated at the rate of 4% per annum to arrive at

operation and maintenance expenses for current year i.e. base year and

ensuing year.

6. The base operation and maintenance expenses so determined shall be

escalated further at the rate of 4% per annum to arrive at permissible

operation and maintenance expenses for the relevant years of tariff period.

…”

4.81 However as submitted by TANGEDCO, Commission is of the view that it is not

appropriate to project the expenses for the next control period based on the actual

expenses incurred prior to unbundling of power utilities. Hence in this order

Commission projects the O&M expenses for next control period based on the audited

accounts for FY 2010-11 and provisional accounts for FY 2011-12.

4.82 In following para’s each component of O&M expenses will be discussed in detail and

Commission’s approval for the same will be accorded.

Employee Expenses

4.83 TANGEDCO has projected the employee expenses for the second control period

based on following assumptions and taking the employee expenses based on

provisional accounts for FY 2011-12 as base

i. Basic salary and the grade pay have been considered with an escalation of 5%

for FY 2013-14 to FY 2014-15 and 10% for FY 2012-13 and FY 2015-16 due

to wage revision.

ii. Escalation of DA rate at 15% per annum.

iii. Other expenses such as terminal benefits, pension schemes etc at 10%.

4.84 Commission has arrived at the employee expenses for FY 2012-13 during the

performance review exercise considering provisional accounts of FY 2011-12 as base.

For projecting the employee expenses for the second control period, Commission has

considered the employee expenses approved for FY 2012-13 as base.

4.85 Though TANGEDCO has proposed escalations of more than 4% for various

components of employee expenses, Commission in accordance with its Regulation

has escalated the approved employee expenses for FY 2013-14 at 4% on all

components except for DA for arriving at the employee expenses for second control

period.



June 2013

4.86 However, as submitted by TANGEDCO if due to expected pay revision the employee

expenses increase significantly during FY 2015-16, TANGEDCO is required to

quantify the impact due to pay revision and submit to the Commission during the true-

up exercise for FY 2015-16.

4.87 Commission is of the view that the escalation of DA rate of 15% proposed by

TANGEDCO is in line with recent increases of DA rate and hence considers the

TANGEDCO submission of 15% for projecting the employee expenses for the second

control period.

Table 187: DA rates used for projecting the employee expenses

Parameter FY 2013 FY 2014 FY 2015 FY 2016

Average DA

rates 72.25% 83.09% 95.55% 109.88%

4.88 The employee expense capitalization for second control period for generating stations

have been arrived based on the percentage employee expenses capitalized in FY

2010-11 and FY 2011-12. However, for distribution business the employee

capitalization as per audited accounts comes to 5%, which is on a lower side

compared to historic trend. Also, TANGEDCO has proposed a higher capitalization

rate of 12%-14% during second control period. In view of these discrepancies,

Commission has relied on average employee capitalization of 9% based on historical

data.

4.89 Based on the above approach and methodology, the employee costs submitted by

TANGEDCO and approved by the Commission is tabulated below:

Table 188: Employee expenses approved for generation business during second control period (Rs. Cr)

Plant

2013-14 2014-15 2015-16


Ennore TPS 79.05 71.91 88.16 78.78 102.54 86.70

Tuticorin TPS 104.82 100.10 116.88 110.06 136.28 121.58

Mettur TPS 93.40 89.25 104.18 98.16 121.56 108.48


Total Coal 343.47 326.09 383.75 358.06 448.47 395.02


Kuttalam GTPS 3.95 2.53 4.41 2.79 5.14 3.08


Valuthur GTPS 7.38 7.15 8.18 7.83 9.45 8.62

Total Gas 20.81 18.68 23.14 20.51 26.65 22.62

Erode HEP 28.51 31.65 31.38 34.90 36.10 38.67

Kadamparai HEP 18.96 18.29 21.01 20.02 24.25 22.00

Kundah HEP 31.00 29.26 34.47 32.04 39.96 35.25

Tirunelveli HEP 24.80 23.74 27.56 25.98 31.93 28.56

Total Hydro 103.27 102.95 114.42 112.94 132.24 124.48




June 2013

Table 189: Employee expenses approved for distribution business during second control period (Rs. Cr)

Parameter

FY 2013-14 FY 2014-15 FY 2015-16


Salary 1,251.67 1,172.13 1,314.26 1,219.02 1,445.68 1,267.78

Overtime wages 33.20 12.07 34.53 12.55 35.91 13.05

Dearness Allowance 922.17 973.89 1,113.52 1,164.78 1,408.60 1,393.07

Other Allowances 107.22 107.22 111.51 111.51 115.97 115.97

Bonus & Exgratia 59.20 59.20 61.57 61.57 64.04 64.04

Terminal benefits 1,900.56 1,470.93 2,090.61 1,529.77 2,299.67 1,590.96

Other Expenses 195.76 180.28 212.35 187.49 230.47 194.99

Gross Employee

Costs 4,469.79 3,975.73 4,938.35 4,286.69 5,600.34 4,639.86

Less: Capitalisation 632.77 365.78 658.08 394.39 684.41 426.28

Net Employee

Expenses 3,837.02 3,609.95 4,280.26 3,892.30 4,915.94 4,212.98

Repair and Maintenance Expenses

4.90 Similar to projection of employee expenses, R&M expenses are projected based on

actual expenses for FY 2010-11 and FY 2011-12. The five months R&M expenses as

per audited accounts are increased pro-rata basis to arrive at annual expenses which

are later escalated at 4% based on TNERC regulation to arrive at expenses equivalent

to FY 2011-12. The average of this escalated R&M expense and actual R&M expense

for FY 2011-12 is used as base and again escalated at 4% year on year to arrive at

R&M expenses for FY 2013-14.

4.91 However, this approach was not adopted for TTPS, KGTPS and VGTPS. It was

observed that R&M expenses for TTPS are significantly higher and for KGTPS are

significantly lower than the historical R&M expenses and therefore for these stations

the R&M expenses for FY 2013-14 are arrived by escalating the Commission

approved R&M expenses for FY 2012-13 by 4%.

4.92 For VGTPS the R&M expenses for FY 2010-11 are significantly high and hence the

R&M expenses for FY 2013-14 are arrived by escalating the actual R&M expenses

for FY 2011-12 by 4% year on year.

4.93 The R&M expenses for FY 2013-14 of distribution business are also arrived by

considering similar methodology adopted for most of the generating stations. The

average expense of FY 2010-11 and FY 2011-12 is escalated by 4% year on year for

arriving at the R&M expenses for FY 2013-14.

4.94 For remaining years of the control period the R&M expenses are arrived by escalating

the R&M expenses for FY 2013-14 by 4% in accordance to Commission’s regulation.

4.95 Based on the above approach, the R&M expenses approved by the Commission and

submitted by TANGEDCO is tabulated below:



June 2013

Table 190: R&M expenses approved by the Commission for TANGEDCO during the second control

period (Rs. Cr)

Plant

2013-14 2014-15 2015-16


Ennore TPS 44.17 41.44 45.93 43.10 47.77 44.83

Tuticorin TPS 106.17 40.26 110.42 41.88 114.83 43.55

Mettur TPS 23.82 29.21 24.78 30.38 25.77 31.60


Total Coal 241.01 171.83 250.65 178.71 260.67 185.86


Kuttalam GTPS 3.86 3.86 4.01 4.01 4.17 4.17


Valuthur GTPS 1.44 1.44 1.49 1.49 1.55 1.55

Total Gas 12.25 11.68 12.74 12.15 13.25 12.64

Erode HEP 1.15 1.08 1.19 1.12 1.24 1.17

Kadamparai HEP 1.63 1.74 1.70 1.81 1.77 1.88

Kundah HEP 1.39 1.76 1.44 1.83 1.50 1.90

Tirunelveli HEP 1.70 1.40 1.76 1.46 1.83 1.52

Total Hydro 5.86 5.98 6.10 6.22 6.34 6.47


Distribution 69.26 67.82 72.03 70.54 74.91 73.36

TANGEDCO 328.37 257.32 341.51 267.51 355.17 278.32

Administrative and General Expenses

4.96 On preliminary scrutiny, Commission has found self insurance charges pertaining to

generating stations have been accounted under distribution business formats. Hence,

Commission has re-estimated the A&G expenses for FY 2010-11 and FY 2011-12 for

generating stations and distribution business after correctly accounting the self

insurance expenses.

4.97 Similar to projection of R&M, A&G expenses are projected based on re-estimated

actual expenses for FY 2010-11 and FY 2011-12. The five months A&G expenses as

per audited accounts are increased pro-rata basis to arrive at the annual expenses

which are later escalated at 4% based on TNERC regulation to arrive at expenses

equivalent to FY 2011-12. The average of this escalated A&G expense and actual

A&G expense for FY 2011-12 is used as base and again escalated at 4% year on year

to arrive at A&G expenses for FY 2013-14.

4.98 The A&G expenses for FY 2013-14 of distribution business are also arrived by

considering similar methodology adopted for most of the generating stations. The

average expense of FY 2010-11 and FY 2011-12 is escalated by 4% year on year for

arriving at the A&G expenses for FY 2013-14.



June 2013

4.99 For remaining years of the control period the A&G expenses are arrived by escalating

the A&G expenses for FY 2013-14 by 4% in accordance to Commission’s regulation.

4.100 Based on the above approach, the A&G expenses submitted by TANGEDCO and


Table 191: A&G expenses approved for TANGEDCO for second control period (Rs. Cr)

Plant 2013-14 2014-15 2015-16


Ennore TPS 7.26 9.15 7.72 9.52 8.22 9.90

Tuticorin TPS 12.54 15.93 13.32 16.56 14.17 17.23

Mettur TPS 8.48 12.91 8.93 13.42 9.41 13.96


Total Coal 33.74 48.39 35.86 50.33 38.16 52.34


Kuttalam GTPS 0.54 1.72 0.59 1.79 0.63 1.86


Valuthur GTPS 0.87 4.01 0.94 4.17 1.00 4.34

Total Gas 3.62 10.05 3.93 10.45 4.23 10.87

Erode HEP 2.85 5.51 3.01 5.74 3.17 5.96

Kadamparai HEP 5.83 8.01 6.10 8.33 6.38 8.66

Kundah HEP 10.97 15.84 11.44 16.47 11.94 17.13

Tirunelveli HEP 3.78 5.14 4.12 5.35 4.50 5.56

Total Hydro 23.43 34.51 24.67 35.89 25.99 37.32


Distribution 194.03 101.03 229.40 105.08 285.27 109.28

TANGEDCO 254.82 193.98 293.86 201.75 353.65 209.81

4.101 Based on the above approved employee expenses, A&G expenses and R&M

expenses, the O&M expenses approved by the Commission for the second control

period is given below.

Table 192: O&M Expenses approved by the Commission for second control period (Rs. Cr)

Plant

2013-14 2014-15 2015-16


Ennore TPS 130.48 122.50 141.81 131.40 158.53 141.43

Tuticorin TPS 223.53 156.29 240.62 168.50 265.28 182.36

Mettur TPS 125.70 131.37 137.89 141.96 156.74 154.04

North Chennai

TPS 138.51 136.15 149.95 145.23 166.75 155.40

Total Coal 618.22 546.31 670.26 587.10 747.30 633.22

Tirumakottai

GTPS 11.74 11.74 12.64 12.50 13.91 13.36

Kuttalam GTPS 8.35 8.11 9.01 8.59 9.94 9.11

Basin Bridge 6.89 7.95 7.54 8.51 8.28 9.14



June 2013

Plant

2013-14 2014-15 2015-16


GTPS

Valuthur GTPS 9.69 12.60 10.61 13.49 12.00 14.51

Total Gas 36.68 40.41 39.81 43.11 44.13 46.13

Erode HEP 32.51 38.24 35.58 41.76 40.51 45.80

Kadamparai

HEP 26.42 28.04 28.81 30.16 32.40 32.54

Kundah HEP 43.36 46.86 47.35 50.34 53.40 54.28

Tirunelveli HEP 30.28 30.28 33.44 32.79 38.26 35.64

Total Hydro 132.56 143.44 145.19 155.05 164.57 168.27

Total

Generation 787.46 730.16 855.26 785.26 956.00 847.62

Distribution 4100.31 3778.80 4581.69 4067.92 5276.12 4395.62

TANGEDCO 4887.76 4508.97 5436.94 4853.06 6232.11 5243.22

Operation and Maintenance expenses for new generating stations

4.102 The TNERC tariff regulations sets the following guidelines for determination of

O&M expenses of the new generating stations:


In case of the thermal power generating stations declared under commercial operation

on or after the notification of these Regulations, the base operation and maintenance

expenses shall be fixed at 1.0% of the actual capital cost (as admitted by the

Commission), in the year of commissioning and shall be subject to an annual

escalation of 4% per annum for the subsequent years.”

4.103 The capital costs of the new power plants filed by TANGEDCO as per MYT Petition

are tabulated below. TANGEDCO has stated that these projects were awarded on firm

price contract and hence no variation in cost is anticipated. The Commission has

provisionally accepted the submission of TANGEDCO for the purpose of estimation

of O&M expenses.

Table 193: O&M expenses for new thermal stations approved by the Commission (Rs. Cr)

Name of the power

plant

Capital cost as filed in

the Petition (including

IDC) – Rs. Crore

O&M expenses

at 1% of capital

cost – Rs. Crore

Date of

Commissioning

O&M expenses

approved for the

financial year of

commissioning –

Rs. Crore

MTPS Stage – III 3550 35.50 June 2013 26.63

NCTPS Stage II –

Unit 1 5814 58.14

August 2013

43.61 NCTPS Stage III –

Unit 2 June 2013

Ennore Expansion 4012 40.12 January 2016 10.03



June 2013

Commission in accordance with its tariff regulations has escalated the O&M expenses

approved for the base year by 4% year on year to arrive at the O&M expenses for the second

control period. The O&M expenses approved for the second control period for new

generating stations is tabulated below.

Table 194: O&M expenses approved by the Commission for new generating stations for the second


Name of the power

plant

FY 2013-14 FY 2014-15 FY 2015-16


MTPS Stage – III 88.20 26.63 92.61 36.92 97.24 38.40

NCTPS Stage II –

Unit 1 168.00 43.61 176.40 60.47 185.22 62.88

NCTPS Stage III –

Unit 2

Ennore Expansion

23.10 10.03

Capital Expenditure and capitalization

4.104 Regulation 17 (5) of the Tariff Regulations, 2005 and Regulation 3 (v)of the Tariff Regulation under MYT framework specifies that the licensee shall get the capital

investment plan approved by the Commission before filing ARR and Application for

determination of Tariff. However, TANGEDCO has not complied with this provision.

4.105 TANGEDCO has filed the capital expenditure and capitalization schedule for the second control period along with its MYT Petition. There were many discrepancies in

the capital expenditure and capitalization information filed in the Petition. The capital

expenditure filed by TANGEDCO was without any cost benefit analysis. In addition,

TANGEDCO has also not provided any information of sources of funding, broad

details and physical quantum for the proposed capital expenditure.

4.106 The observations and issues pertaining to capital expenditure and capitalization schedule for second control period are same as those discussed in Chapter -A3 under

capital expenditure section.

4.107 Commission reiterates the following directions and observations made in Chapter -A3

i. The information submitted pertaining to the capital expenditure and

capitalization information submitted by TANGEDCO is not satisfactory

ii. The data quality and iteration that went through the capital expenditure and

capitalization schedule along with its GFA schedule needed to be substantially

improved.

iii. Commission directs TANGEDCO to

a) Reconcile its accounts with respect to capital expenditure and

prepare the scheme wise data as per the formats specified by the

Commission.



June 2013

b) File the progress of the capital expenditure and capitalization on

quarterly basis.

c) Finalize its transfer scheme through GoTN at the earliest and

reconcile the GFA, CWIP and capitalization schedules

4.108 In ChapterA3 Commission has expressed its opinion regarding capital expenditure

and is provisionally accepting the capital expenditure and capitalization schedule as

proposed by TANGEDCO for the second control period.

4.109 The actual capital expenditure for the second control period will be reviewed based on audited accounts and the impact of final transfer scheme, prudence verification based

on scheme wise data to be submitted by TANGEDCO will be done during the truing-

up process.

4.110 As mentioned earlier, Commission observed that there are number of new generating

stations for which TANGEDCO had neither sought prior approval of their capital

investment plan nor applied for determination of tariff in advance for the new

generating stations.

4.111 Regulation 6 (7) (i) (a) of the TNERC Tariff Regulations, 2005 specifies the following:

“A generation company or a licensee may make an application as per Appendix – I to these

Regulations, for determination of provisional tariff in advance of the anticipated date of

completion of the project, based on the capital expenditure actually incurred upto the date of

making of the application or a date prior to making of the application, duly audited and

certified by the statutory auditors, and the provisional tariff shall be charged from the date of

commercial operation of the respective units of the generation station or the line or sub-

station of the transmission system.”

4.112 TANGEDCO is required to file separate Petitions for approval of the tariff for the new generating stations along with accounts for these generating stations duly

certified by statutory auditor. On Commissions directive, TANGEDCO has submitted

partial information for new thermal stations as per the formats prescribed in TNERC

Tariff Regulations. However, the information is not certified by statutory auditor.

With respect to new hydro stations TANGEDCO has not provided any information.

4.113 Commission directs the TANGEDCO to file the separate petitions based on TNERC Regulations duly certified by the statutory auditor along with relevant

generating station accounts within 90 days of issuance of this Order.

4.114 While reviewing the revised capital expenditure proposed for the second control

period it was observed that TANGEDCO has also included the capital expenditure for

Udangudi TPS. This power plant is not likely to be commissioned during the control

period and hence Commission is not considering the capital expenditure for this

power plant in this order. Commission directs TANGEDCO to file a separate

Petition as mentioned above for the approval of capital cost and tariff for this

power plant.



June 2013

4.115 The capital expenditure and capitalization provisionally approved in this order is tabulated below.

Table 195: Capital expenditure and capitalization for generating stations (Rs. Crore)

Plant

Capital Expenditure Capitalization

FY 2013-14 FY 2014-15 FY 2015-16 FY 2013-14 FY 2014-15 FY 2015-16

Ennore TPS 9.00 9.90 10.89 57.02 9.54 10.49

Tuticorin TPS 99.44 109.39 120.33 96.61 105.41 115.95

Mettur TPS 95.06 104.57 115.03 98.30 100.77 110.84

North Chennai

TPS 54.30 59.73 65.70 49.15 57.56 63.31

NCTPS Stage-

II** 269.46 25.50 28.05 5,814.04 12.25 29.58

MTPS Stage-III** 774.25 12.50 13.75 3,550.00 6.25 14.50

Ennore Expansion 1,051.80 1,658.20 1,450.00 - - 4,511.07

Total Thermal 2353.31 1979.79 1803.75 9665.12 291.78 4855.74

Tirumakottai

GTPS 5.82 6.40 7.04 5.60 6.17 6.79

Kuttalam GTPS 3.84 4.22 4.65 2.30 4.07 4.48

Basin Bridge

GTPS 0.90 0.99 1.09 1.72 0.95 1.05

Valuthur GTPS 5.42 5.97 6.56 8.80 5.75 6.32

Total Gas 15.98 17.58 19.34 18.42 16.94 18.64

Erode HEP 1.50 1.65 1.82 0 50.29 1.75

Kadamparai HEP 1.02 1.12 1.23 0.66 1.08 1.19

Kundah HEP 25.82 175.90 315.99 1.39 0.86 0.95

Tirunelveli HEP 1.62 1.78 1.96 11.60 18.72 1.89

New Hydro

Addition - - - - - -

Bhavani Barrage* 22.31 - - 307.18 22.34 -

Bhavani Katlai * 7.50 - - 837.02 7.59 -

Periyar * 26.05 - - 125.88 26.06 -

Total Hydro 85.82 180.45 321 1283.73 126.94 5.78

Cogen Sugar

Mills Under

Modernisation

205.44

711.46 385.73 -

Generation 2660.55 2177.82 2144.09 11678.72 821.39 4880.16

*All the new hydro and thermal projects that are getting capitalized in second control period

will be reviewed at the time of examination of individual tariff Petitions



June 2013

Table 196: Capital expenditure and capitalization approved for distribution business for second control

period (Rs. Crore)

Capital Schemes Capital Expenditure Capitalization

FY 2013-14 FY 2014-15 FY 2015-16 FY 2013-14 FY 2014-15 FY 2015-16

33 KV Lines 33.28 38.27 45.92 26.15 37.77 45.15

33 KV Substations 47.88 55.07 66.08 37.62 54.35 64.98

11 KV Lines and

Other LT Lines 27.94 32.13 38.56 21.95 31.71 37.91

Other Construction

Schemes 717.70 825.35 990.42 563.94 824.44 991.01

General

Improvement

Schemes

355.58 408.91 490.69 279.40 403.58 482.52

Distribution Transformers

Failure/Replacement

100 KVA 10.98 12.63 13.89 10.98 12.63 13.89

250 KVA 18.30 21.05 23.15 18.30 21.05 23.15

500 KVA 13.80 15.87 17.46 13.80 15.87 17.46

New/Additional

with Structure

100 KVA 11.53 13.26 14.58 11.53 13.26 14.58

250 KVA 19.22 22.10 24.31 19.22 22.10 24.31

500 KVA 14.49 16.66 18.33 14.49 16.66 18.33

Extension of Service connections

HT Industry 26.54 30.53 33.58 26.54 30.53 33.58

LT Industries 14.70 16.91 18.60 14.70 16.91 18.60

LT Domestic 16.62 19.11 21.02 16.62 19.11 21.02

LT Commercial 11.82 13.59 14.95 11.82 13.59 14.95

Other categories 22.20 25.53 28.08 22.20 25.53 28.08

Deposit

Contribution Works

(DCW)

57.70 64.90 72.50 57.70 64.90 72.50

Rural Electrification

Works 49.78 57.24 68.69 39.11 56.49 67.54

Agricultural

Services 49.72 57.18 68.61 39.07 56.43 67.47

Segregation of

Feeders 2.48 2.85 3.42 1.94 2.81 3.36

Hut Electrification 0.99 1.14 1.37 0.78 1.12 1.34

RAPDRP - PART B

Schemes - Erection

of new SS, RMU,

Meters,

Sectionalisation, etc

916.46 752.05 484.67 916.46 752.05 484.67

RGGVY 1.25

1.25 - -

Survey,

investigation,

computerisation

2.35 2.75 2.95 2.35 2.75 2.95

Others if any 6.30 7.25 7.97 6.30 7.25 7.97

Total 2,449.59 2,512.30 2,569.79 2,174.23 2,502.88 2,557.33



June 2013

Depreciation

4.116 In its Petition, TANGEDCO has submitted the opening gross block for each of the

generating plant and for distribution function for FY 2010-11 (5 months) in line with

the provisional transfer scheme notified by the Government of Tamil Nadu vide

notification dated 2nd January 2012.

4.117 Later in response to Commissions query regarding revaluation reserve, TANGEDCO

revised the opening GFA based on provisional accounts and without considering the

revaluation reserve.

4.118 In another query raised by the Commission regarding the depreciation rates used by

TANGEDCO, it has submitted that TANGEDCO has used the weighted average

depreciation rate for the particular group of asset arrived based on depreciation rates

specified in the Tariff Regulation. Hence, Commission is accepting the depreciation

rates as proposed by TANGEDCO.

4.119 TNERC Tariff Regulations 2005 specifies following guidelines for calculation of depreciation:

24. Depreciation

For the purpose of tariff, depreciation shall be computed in the following manners:

i. The value base for the purpose of depreciation shall be historical cost

of the asset.

ii. The depreciation shall be calculated at the rates as per the Annexure

to these Regulations.

iii. The residual value of assets shall be considered as 10% and

depreciation shall be allowed upto maximum of 90% of the estimated

cost of the Asset.

iv. Land is not a depreciable asset and its cost shall be excluded from the

capital cost while computing 90% of the historical cost of the asset.

v. The historical cost of the asset shall include additional capitalisation.

vi. Depreciation shall be chargeable from the first year of operation. In case of

operation of the asset for part of the year, depreciation shall be

charged on pro-rata basis.

vii. After the assets are fully depreciated the benefit of reduced tariff shall

be made available to the consumer.

4.120 Commission has calculated depreciation considering the revised opening GFA

without revaluation reserve, weighted average depreciation rates and deductions

submitted by TANGEDCO, and capitalization approved by the Commission in this

order. The GFA considered and depreciation rates considered for estimation of

depreciation is tabulated below:



June 2013

Table 197: Opening GFA considered for calculation of depreciation (Rs. Crore)

Power Station

As on April

2013

As on April

2014

As on April

2015

Ennore TPS 1059.48 1116.51 1126.05

Tuticorin TPS 1925.06 2021.67 2127.08

Mettur TPS 1147.29 1245.59 1346.35


NCTPS Stage-II** 5814.04 5826.29

MTPS Stage-III** 3550.00 3556.25

Ennore Expansion

Total Thermal 6,170.40 15,835.53 16,127.30


Kuttalam GTPS 503.27 505.57 509.64


Valuthur GTPS 622.73 631.53 637.27

Total Gas 2,135.12 2,153.54 2,170.48

Erode HEP - (incl. Bhavani

Barrage and Bhavani Khattai) 733.21 2003.28 2109.56

Kadamparai HEP 366.04 366.69 367.78

Kundah HEP 957.72 959.11 959.97


Periyar) 420.34 431.94 450.65

Total Hydro 2,477.31 3,761.02 3,887.96

Tirunelveli 206.45 206.45 206.45

Udumalpet 136.41 136.41 136.41

Total Wind 342.86 342.86 342.86

Cogeneration Plants

711.46 1097.19

Generation 11,125.68 22,804.41 23,625.80

Distribution 10,595.12 12,769.34 15,272.22

TANGEDCO 21,720.80 35,573.75 38,898.02

4.121 For new generating stations, TANGEDCO has not considered depreciation during the year of commissioning. However as per TNERC Tariff Regulations 2005 clause

24(vi) depreciation for generating stations shall be chargeable from the first year of

operation. In case of operation of the asset for part of the year, depreciation

shall be charged on pro-rata basis. Accordingly, Commission has allowed the

depreciation for new generating stations on pro-rata based on CoD during the first

year of operation.



June 2013

4.122 Based on the above approach, Commission approves depreciation for all the

generating stations and distribution business except for wind stations and

cogeneration plants. In the last tariff order Commission has approved a transfer price

of Rs. 2.75 per unit own wind mills while for cogeneration plants in this order

Commission is considering the tariff based on its cogeneration tariff order dated 31st

July 2012. Hence, in this order Commission is not determining fixed expenses on

account of the own wind mills and cogeneration plants.

Table 198: Depreciation approved by the Commission for the second control period (Rs. Crore)

Power Station

FY 2013-14 FY 2014-15 FY 2015-16


Ennore TPS 37.80 37.54 37.85 39.56 37.90 39.90

Tuticorin TPS 64.98 66.36 66.99 69.69 69.42 73.33

Mettur TPS 39.66 37.37 40.28 40.57 41.03 43.85


NCTPS Stage-II - 124.61 186.92 186.92 187.69 187.69

MTPS Stage-III 126.61 86.37 127.04 127.04 127.49 127.49

Ennore Expansion

- 36.58

Total Coal 333.91 415.52 525.23 528.57 531.23 575.42


Kuttalam GTPS 12.86 17.63 13.22 17.71 13.49 17.86


Valuthur GTPS 19.11 21.99 19.68 22.30 20.43 22.50

Total Gas 67.68 75.57 69.93 76.22 71.48 76.82

Erode HEP - (incl.

Bhavani Barrage and

Bhavani Khattai)

35.90 21.45 35.92 58.62 35.96 61.73

Kadamparai HEP 10.53 10.58 12.26 10.60 14.31 10.63

Kundah HEP 25.39 25.19 25.49 25.23 26.10 25.25


Periyar) 14.36 12.19 14.99 12.53 16.44 13.07

Total Hydro 86.18 69.41 88.66 106.98 92.81 110.68



TANGEDCO 815.38 922.89 1072.04 1147.03 1225.92 1282.06

Note: During true-up/performance review/tariff determination exercise, the NFA of each

asset must be verified with respect to audited accounts to confirm whether the asset has

depreciated by 90%.



June 2013

Interest on long term loans and other financing charges

4.123 In the last tariff order Commission has approved the total interest expenses

corresponding to actual long term and short term loans borrowed by TANGEDCO. In

the current Petition TANGEDCO has claimed the interest expenses corresponding to

only long term loans and separately claimed the interest on working capital as per

norms specified by TNERC in its Tariff Regulations 2005.

4.124 The opening balance of loans as on 1st November 2010 for TANGEDCO considered

in its Petition is based on the provisional transfer scheme notified as on 2nd January

2012. TANGEDCO in its Petition has submitted that the loan of a financial

institution is not linked with any particular generating plant or the CAPEX schemes as

erstwhile TNEB used to have a basket of loan which was used to meet the total capital

expenditure of erstwhile TNEB. Therefore it is difficult to identify the debt / interest

and equity of the generating plant or station wise or distribution function wise.

4.125 Hence TANGEDCO has adopted the following approach for segregation of interest to the generating plant / station and distribution function

i. Project specific loans for generation and distribution is initially

allotted to each of the respective project and considered as opening

loan balance for that particular project.

ii. Large quantum of generic loans which cannot be differentiated into

project specific loans and interest paid on these loans is bifurcated as

per opening gross block of generation and distribution notified as per

transfer scheme.

4.126 In response to Commissions query, TANGEDCO has revised the long term loans and

segregated these loans among those borrowed for capital projects, repayment of

existing loans and funding the revenue expenditure. The summary of revised

submission of TANGEDCO is tabulated below:

Table 199: Revised interest expenses submitted by TANGEDCO in Rs. Crore

Particulars 2013-14 2014-15 2015-16

Loan Profile

Op. Balance 37,822 45,569 52,291


Add: Addition for Loan

Repayment 11,631 3,099 3,189

Add: For Revenue Expenditure 4,233 3,785 1,908


Closing Balance 45,569 52,291 57,494

Gross Interest Expenses 4806.37 5628.38 6265.39

IDC 863.85 798.41 934.36

Net Interest Expenses 3942.52 4829.97 5331.03



June 2013

4.127 In its last order Commission has stated that there is a mix up between the capital

account and the revenue account. In the revised submission TANGEDCO has again

included the borrowings corresponding to revenue account in capital account in its

revised submission. Based on the revised submission Commission has made the

following observations:

i. The average interest rate for FY 2010-11 is higher than the rate at which the

long term loans are procured.

ii. The loan repayment submitted by TANGEDCO includes the repayment of

loans that have been borrowed for revenue expenditure during the control

period.

4.128 In ChapterA3, Commission has discussed in detail the approach to be adopted for

approving interest on long term loans and finance charges. Commission reiterates its

view and treats the capital account and revenue account separately. Commission for

the determination of interest expenses on long term loans for the second control

period has considered following assumptions:

i. Closing loans as on March 2013 as estimated by the Commission for the first

control period have been taken as base.

ii. The repayment of existing loans as per audited accounts also includes the

repayment of loans borrowed for revenue account. Commission is treating the

revenue account separately and also allowing the interest expenses on account

of regulatory asset approved in its last tariff order. Hence, allowing the

borrowings and interest expenses corresponding to the repayment of loans

borrowed for funding of revenue account will result in double accounting of

the interest expenses allowed for funding the revenue gap. In view of this,

Commission is accepting the opening loans as on 1st November 2010 and is

assuming a repayment period of 10 years.

iii. The repayment period of new loans borrowed during the control period is

assumed to be 10 years

iv. The borrowings required for loan repayment will be estimated after taking into

account the depreciation allowed during the year.

v. Loans required for the capital works will be arrived after considering the

approved capital expenditure and available grants and consumer contribution

during the control period.

vi. Equity required for funding the capital expenditure is assumed to be nil as

Commission is not allowing any return on equity.

vii. The consumer contribution and grants for FY 2013-14 to FY 2015-16 have

been estimated considering the historical trends

viii. Interest expenses on account of capital works for wind assets has not been

considered as borrowings on account of wind assets cannot be loaded on

determination of tariff for other generating stations and distribution business.

Commission has already approved generation cost for wind assets based on

transfer price mechanism.



June 2013

ix. Interest on cogeneration sugar mills is also not considered as the tariff for

these generating stations is taken as per Commission’s tariff order for

procurement of power from cogeneration.

x. Interest rate for FY 2013-14 to FY 2015-16 is assumed to be at 11.98% i.e. the

average interest rate for FY 2010-11 and FY 2011-12 arrived after considering

revised loan profile.

xi. Interest during construction (IDC) is approved based on capital works in

progress.

4.129 The details of borrowings and interest expenses approved by the Commission

corresponding to capital expenditure and repayment of loans are given below.

Table 200: Borrowings considered for funding capital expenditure (Rs. Cr)

Particulars 2013-14 2014-15 2015-16

Capital Expenditure 5,110.15 4,690.12 4,713.88

Less: Consumer Contribution 497.68 518.67 540.55

Less: Grants 104.94 104.94 104.94

Loans required for finding capital expenditure 4,507.53 4,066.52 4,068.39

Table 201: Borrowings considered for repayment of loans (Rs. Cr)

Particulars 2013-14 2014-15 2015-16

Repayment of Existing loans (As on Nov 1, 2010) 1,874.72 1,874.72 1,874.72

Repayment of new loans 2543.72 3359.04 4250.17

Less: Depreciation 922.90 1147.03 1282.06

Loans required for repayment of loans 3,495.54 4,086.74 4,842.83

Table 202: Average interest rate estimated for the control period

Parameter 2010-11 2011-12 Average

Opening Loans (Rs. Cr)* 18747 23094

Closing Loans (Rs. Cr)* 23094 33277

Average Loans (Rs. Cr) 20921 28186

Interest Charged (Rs. Cr) 1156 3018

Average interest rate 13.26% 10.71% 11.98%

*Revised loan profile considering first seven months loan transactions in FY 11

Table 203: Interest expenses approved by the Commission for the second control period (Rs. Cr)

Particulars 2013-14 2014-15 2015-16

Loan Profile

Op. Balance 28,461 32,045 34,965


Add: Addition for Loan Repayment of loans 3,496 4,087 4,843


Closing Balance 32,045 34,965 37,751

Gross Interest Expenses 3,625 4,015 4,357

IDC 1,060 618 738



June 2013

Particulars 2013-14 2014-15 2015-16

Net Interest Expenses 2,565 3,397 3,619

Net Interest Expenses - Cogeneration plants 43 108 131

Net Interest Expenses – approved 2,522 3,288 3,487

4.130 It is pertinent to mention that long term loans of Rs. 15065 Crs have been allocated to

TANGEDCO through provisional transfer scheme. The repayment of loans is usually

done through depreciation provided. However, due to high opening loans, the

depreciation provision as per regulations is not sufficient for meeting the debt

obligations of loans allocated through transfer scheme. TANGEDCO is repaying the

existing loans by borrowing new loans. Therefore, borrowings required for meeting

debt obligations can only be reduced either by additional cash infusion into the

business or by finalizing the transfer scheme by reducing opening loans.

4.131 Commission has allocated the opening loans as on November 2010 between

generating stations and distribution business based on net fixed assets and CWIP.

Later on the addition and repayment of loans allocation has been done based on

approach as detailed above to arrive at the opening loans as on April 2013. The

interest expenses approved by the Commission based on loan allocation among

generating stations and distribution is tabulated below:

Table 204: Approved interest expenses on long term loans for TANGEDCO for second control period

(Rs. Cr.)

Power Station 2013-14 2014-15 2015-16


Ennore TPS 11.07 105.10 23.48 104.47 19.68 100.91

Tuticorin TPS 101.92 132.25 118.30 136.21 86.95 140.90

Mettur TPS 43.23 74.97 51.60 82.23 43.95 89.85


NCTPS Stage-II 468.52 340.87 362.32 671.27 277.24 651.33

MTPS Stage-III 317.60 173.48 279.92 373.76 242.02 359.75

Ennore Expansion

-

- 215.37 67.02

Total Coal 1,133.33 936.77 1,024.84 1,476.75 1,027.93 1,517.95


Kuttalam GTPS 49.69 55.73 48.47 53.99 44.53 52.37


Valuthur GTPS 87.51 109.76 81.81 107.98 73.43 106.02

Total Gas 266.71 227.36 258.45 220.38 236.58 213.34

Erode HEP - (incl.

Bhavani Barrage and

Bhavani Khattai)

162.59 152.03 158.36 220.59 144.76 218.29

Kadamparai HEP 29.86 34.59 35.75 33.43 38.14 32.29

Kundah HEP 68.50 123.90 81.99 121.01 84.00 118.10

Tirunelveli HEP (incl

- Periyar) 86.85 59.42 80.03 68.86 71.87 70.12

Total Hydro 347.80 369.95 356.14 443.89 338.77 438.80

Total Generation 1,747.84 1,534.08 1,639.43 2,141.02 1,603.28 2,170.10

Distribution 1,663.81 988.31 1,773.44 1,147.27 1,862.00 1,317.23

TANGEDCO 3,411.65 2,522.39 3,412.87 3,288.30 3,465.28 3,487.33



June 2013

4.132 TANGEDCO in its Petition has also claimed interest on consumer security deposit at

7% on consumer security deposits and other finance charges assuming an escalation

of 5%.

4.133 Commission has approved the interest expenses incurred on consumer security

deposits to the extent of working capital requirement determined by the Commission

in Table 209 based on the norms specified in the TNERC Tariff Regulation, 2005 for

distribution business. The interest rate has been considered at 9% in accordance to its

order on interest on consumer security deposit dated 5th February 2013.

4.134 Commission has observed that TANGEDCO has claimed interest on GPF in other

finance charges. Commission is not allowing the interest expenses on GPF as it has

not considered GPF reserve for funding of capital expenditure. Also, TANGEDCO

has escalated the other finance charges by 5% and has not provided adequate basis for

this escalation. However, Commission is of the view that other finance charges are

mainly due to guarantee charges and fund raising charges. These charges would

depend on type and amount of loans being borrowed during the year. Hence,

Commission is not accepting the escalation of 5% proposed by the Petitioner and is

approving these charges equivalent to those incurred during FY 12. Any increase on

account of these charges will be subsequently reviewed during the true-up exercise.

4.135 The interest expenses on consumer security deposits and other finance charges

approved by the Commission are tabulated below.

Table 205: Interest on consumer security deposits and and other finance charges approved by the

Commission (Rs. Cr)

Parameter 2013-14 2014-15 2015-16




Guarantee Charges 43.04 39.04 45.20 39.04 47.46 39.04

Other Charges (Finance

Cost Paid) 111.92 48.10 117.52 48.10 123.39 48.10

Total 573.97 536.74 602.68 592.37 632.81 621.45

4.136 The overall interest and other finance charges approved by the Commission for the

distribution business during the second control period are given below.

Table 206: Interest and other finance charges approved for distribution business for the second control

period (Rs. Cr)

Parameter 2013-14 2014-15 2015-16


Interest on long term

loans 1663.81 988.31 1773.44 1147.27 1862.00 1317.23




Total interest and

finance charges 2,237.78 1,525.05 2,376.11 1,739.64 2,494.81 1,938.68



June 2013

Return on Equity

4.137 TANGEDCO in its Petition has submitted that it has calculated return on equity for

the control period at 14% on the average equity base for the corresponding year.

Table 207: Return on equity filed by TANGEDCO for the second control period (Rs. Cr)

Power Station 2013-14 2014-15 2015-16

Ennore TPS 32.97 33.03 33.08

Tuticorin TPS 59.55 62.27 65.39

Mettur TPS 39.44 40.32 41.33

North Chennai

TPS 65.76 67.69 69.90

NCTPS Stage-

II** 122.09 244.69 245.73

MTPS Stage-

III** 149.37 149.88 150.42

Ennore

Expansion - 67.63

Tirumakottai

GTPS 14.74 15.63 16.07

Kuttalam GTPS 11.72 12.09 12.42

Basin Bridge

GTPS 17.14 17.34 17.43

Valuthur Unit-I 17.66 18.44 19.38

Valuthur Unit-II - - -

- -

Erode HEP 44.60 44.65 44.70


Kundah HEP 29.97 30.53 31.54


Generation 633.09 768.90 852.68

Distribution 404.66 600.67 965.59

TANGEDCO 1,037.75 1,369.57 1,818.27

4.138 Commission in Chapter A3 has discussed in detail its stand on not allowing return on

equity. In accordance to the stand taken, Commission is not allowing return on equity

for TANGEDCO during the control period due to following reasons:

i. Based on available sources of funding equity has been diverted towards

revenue account right from FY 2003 and hence the addition in equity base as

per audited accounts is on account of funding the revenue expenditure but not

for creation of capital assets.



June 2013

ii. Loans approved for funding the capital expenditure for generating stations and

distribution business during the control period are without considering the

equity


4.139 TANGEDCO has claimed interest on working capital for its generating stations and

distribution based on norms specified in the TNERC Tariff Regulations, 2005.

4.140 Commission has not approved the interest on working capital in its last order as it has

approved interest expenses corresponding to total loans including short term

borrowings. However TANGEDCO in its current Petition has not claimed interest

expenses for short term borrowings separately and instead claimed interest on

working capital based on approved norms. Commission is of the view that it is

appropriate to approve and segregate the loans based on purpose and in line with its

Tariff Regulations. Hence, Commission approves the interest expenses based on its

Tariff Regulations and relevant guidelines are reproduced below:

“26. Working Capital

(2) Till such a formula is evolved, the norms for Working Capital shall be as below:

(a) For Coal based / Lignite fired Generating Stations

(i) Cost of coal or lignite for one and half month for pit head

generating stations and two months for non pit head generating stations

corresponding to the target availability;

(ii) Cost of secondary fuel oil for two months corresponding to the

target availability;


(iv) Maintenance spares @ 1% of the historical cost escalated @ 6%


(v) Receivables equivalent to two months of fixed and variable charges for

sale of electricity calculated on .target availability.

(b) For Gas Turbine / combined cycle Generating Stations

(i) Fuel cost for one month corresponding to the target availability duly

taking into account the mode of operation of the Generating Station on gas

fuel and liquid fuel;

(ii) Liquid fuel stock for half month;


(iv)Maintenance spares @ 1% of the historical cost escalated @ 6% per

annum from the date of commercial operation; and

(v) Receivables equivalent to two months of fixed and variable charges

for sale of electricity calculated on target availability.

(c) For Hydro Power Generating Stations

The working Capital shall cover:

(i) Operation and Maintenance expenses for one month;

(ii) Maintenance spares @ 1% of the historical cost escalated @ 6%




June 2013

(iii) Receivables equivalent to two months of fixed charges for sale of

electricity, calculated on normative capacity index.

(e) For Distribution System

(i) Operation and Maintenance expenses for one month

(ii) Maintenance spares for two months based on annual requirement

considered at 1% of the gross fixed cost at the beginning of the year.

(iii) Receivable equivalent to sixty day consumption charges.

27. Interest on Working Capital

The short term rate of interest on working capital shall be on normative basis and shall be

equivalent to the primary lending rate of State Bank of India as on 1st April of the

relevant year.”

4.141 Commission has estimated the interest on working capital for generating stations

considering the variable costs and fixed costs approved in this orders and interest rate

of 14.45% as per SBI PLR dated April 1, 2013.

4.142 The interest on working capital approved by the Commission for generating stations

during the second control period is tabulated below.

Table 208: Interest on working capital approved by the Commission during the control period (Rs.

Crore)

Power Station 2013-14 2014-15 2015-16


Ennore TPS 30.65 21.37 31.11 21.79 31.79 22.10

Tuticorin TPS 129.57 120.66 137.53 121.39 145.74 122.52

Mettur TPS 101.73 99.70 107.83 100.45 113.31 101.53

North Chennai

TPS 76.09 70.61 80.92 71.01 83.76 71.64

NCTPS Stage-

II** 136.39 93.13 171.96 112.82 186.24 112.56

MTPS Stage-

III** 91.63 56.55 102.25 58.62 110.65 58.38

Ennore

Expansion 26.58 10.53

Tirumakottai

GTPS 9.14 7.50 9.62 7.51 9.88 7.55

Kuttalam GTPS 7.54 7.45 7.80 7.43 7.85 7.44

Basin Bridge

GTPS 8.52 4.75 7.45 4.72 7.57 4.69

Valuthur GTPS 19.88 12.51 20.05 12.52 21.01 12.55

Erode HEP -

(incl. Bhavani

Barrage and

Bhavani Khattai)

9.33 6.78 9.33 11.40 9.18 11.72

Kadamparai HEP 3.01 2.69 3.46 2.74 3.91 2.80

Kundah HEP 6.32 6.81 6.83 6.87 7.19 6.94

Tirunelveli HEP

(incl - Periyar) 5.00 3.41 4.97 3.76 5.13 3.93

Total

Generation 634.80 513.92 701.11 543.03 769.79 556.86



June 2013

4.143 For distribution business TANGEDCO has claimed the working capital requirement

based on norms approved by the Commission except for maintenance spares. The

working capital requirement for maintenance spares has been claimed at 1% of GFA

instead of two months of the annual requirement as per regulations. Also,

TANGEDCO has not taken into account the consumer security deposits for arriving at

the working capital requirement.

4.144 Commission has approved the interest on consumer security deposit to the extent of

working capital requirement under interest on loans and hence Commission is of the

view that interest on working capital for distribution business can only be allowed on

working capital requirement above the consumer security deposits.

4.145 Consumer security deposit is estimated based on historical trend of increase in

consumers and average security deposit per consumer. Net working capital

requirement is estimated considering the norms. The working capital requirement and

available consumer security deposit for the control period is tabulated below.

Table 209: Approved working capital requirement and available consumer security deposits during the

second control period (Rs. Cr)

Particulars 2013-14 2014-15 2015-16


O & M expenses 341.69 314.90 381.81 338.99 439.68 366.30

Maintenance Spares 187.73 17.66 254.85 21.20 367.11 25.45

Receivables 4,949.13 4,663.04 7,747.94 5,253.44 8,595.93 5,541.64

Total Working

Capital 5,478.55 4,995.60 8,384.60 5,613.71 9,402.71 5,933.40

Available Consumer

Security Deposits 6,237.27

6,625.57

7,021.22

Net Requirement 5,478.55 -1,241.67 8,384.60 -1,011.86 9,402.71 -1,087.82

4.146 From the above table it can be observed that available consumer security deposits are

more than the working capital requirement. In view of this Commission is not

approving any interest on working capital as it has already approved interest on

consumer security deposits in interest and finance charges.

Table 210: Interest on working capital approved during the second control period (Rs. Cr)



Distribution 808.09 0.00 1236.73 0.00 1386.90 0.00



June 2013

Other Debits

4.147 TANGEDCO in its Petition has included the other fuel costs, lubricants and consumable and water costs in other debits for generating stations. In response to

Commissions query regarding this discrepancy, TANGEDCO has made the following

submissions

i. Cost of water, other fuel costs and lubricants and consumables are

part of operating expenses of power stations of TANGEDCO and

these expenses were not claimed under fuel expenses or repairs and

maintenance expenses, and therefore have been included in other

debits. TANGEDCO requested the Commission to allow these

expenses as they are operating expenses for generation of power.

4.148 Commission is of the view that though TANGEDCO has not included the operating

expenses claimed in other debits in its O&M expenses, these expenses cannot be

allowed as Commission has already approved the O&M expenses in this order and all

the operating expenses must be met through approved O&M expenses

4.149 Hence Commission is not approving the operating expenses claimed in other debits.

Commission is allowing other debits during the second control period for the

generating stations equivalent to that approved for FY 2012-13 in this order.

Table 211: Other debits approved by the Commission for generating stations (Rs. Cr)

Power Station 2013-14 2014-15 2015-16


Ennore TPS 12.60 0.20 13.10 0.20 13.63 0.20

Tuticorin TPS 7.69 0.30 8.00 0.30 8.32 0.30

Mettur TPS 1.70 0.20 1.77 0.20 1.84 0.20


NCTPS Stage-II 0.00

0.00

0.00

MTPS Stage-III 0.00

0.00

0.00

Ennore Expansion

0.00

0.00


Kuttalam GTPS 0.14 0.06 0.15 0.06 0.15 0.06


Valuthur Unit-I 0.00 0.20 0.00 0.20 0.00 0.20

Valuthur Unit-II 0.00

0.00

0.00

Erode HEP - (incl.

Bhavani Barrage and

Bhavani Khattai)

0.10 0.12 0.11 0.12 0.11 0.12

Kadamparai HEP 0.00 0.10 0.00 0.10 0.00 0.10

Kundah HEP 0.17 0.20 0.17 0.20 0.18 0.20


Periyar) 3.07 0.10 3.19 0.10 3.32 0.10




June 2013

4.150 For distribution business TANGEDCO has included DSM under other debits.

However TANGEDCO in its Petition has not provided any adequate information

pertaining to DSM expenses.

4.151 Regulation 29 of TNERC Tariff Regulations, 2005 states as under:

“29. Bad and Doubtful Debt

The Commission may consider and allow a provision upto 0.25% of receivables for

writing off of bad and doubtful debts. The licensee or Generating Company shall

write off the Bad and Doubtful debts as per the procedure laid down by them.”

4.152 The Commission observed that provision of writing off bad and doubtful debt as

submitted by TANGEDCO is within the permissible limit of 0.25% of receivable

from sale of power at existing tariff. Hence, Commission approves the other debits as

claimed by TANGEDCO except for DSM.

Table 212: Other Debits approved by the Commission for Distribution Business (Rs. Cr)

Parameter 2013-14 2014-15 2015-16


Research & Development

expenses 0.07 0.07 0.08 0.08 0.09 0.09

Bad & Doubtful debts

written off

(0.25% of receivables)

14.21 14.21 19.37 19.37 21.49 21.49

Miscellaneous losses and

written off/provided for 5.66 5.66 6.23 6.23 6.85 6.85

Demand Side Management 10.00 - 10.00 - 10.00 -

Total 29.94 19.94 35.68 25.68 38.43 28.43

Less: Capitalization 0.01 0.01 0.01 0.01 0.01 0.01

Net expenses 29.93 19.93 35.67 25.67 38.42 28.42

Contribution for Contingency reserves

4.153 TANGEDCO has claimed contingency reserve at 0.25% of GFA in FY 2012-13 in

accordance to TNERC MYT Regulations.

“Regulation 35 of the MYT Regulations 2009,

To meet out any contingent liability or unforeseen revenue losses, the Distribution licensees

shall maintain a contingency reserve. The Distribution Licensees shall estimate the

contingency reserve on the value of Assets for each year of the control period.

Regualtion31 of the Tariff Regulations 2005,

The Generating Companies and the licensees shall provide and maintain a

contingency reserve upto 0.5% of the value of assets at the beginning of the year and

the provision made for the year will be allowed in their Revenue Requirement. This

reserve will be utilised to meet any contingent liability or unforeseen revenue losses.”



June 2013

4.154 It is pertinent to mention that provision for contingency reserve is appropriate when

utility is in revenue surplus and some portion of this surplus revenue can be

contributed for contingency reserve. However, in the current petition TANGEDCO

has shown a revenue gap of Rs. 10344 Crs in FY 2013-14 at existing tariffs and in this

situation it is inapt to allow the expenses on account of contingency reserve. Hence,

Commission disallows the contingency reserve as claimed by TANGEDCO.

Table 213: Contribution to contingency reserved approved by the Commission (Rs. Cr)

Parameter 2013-14 2014-15 2015-16


Contribution to Contingency

Reserves 75 Nil 89 Nil 122 Nil

Summary of fixed Cost approved for Distribution business

4.155 Based on above submissions, the summary of fixed cost approved for distribution

function during the second control period is tabulated below:

Table 214: Summary of fixed costs approved by the Commission for the second control period (Rs. Cr)

Parameter TANGEDCO filing Commission

FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016

Operation and Maintenance Expenses 4100 4582 5276 3779 4068 4396

Depreciation 328 388 530 362 435 519

Interest on Long term loan 2238 2376 2495 1525 1740 1938

Other Debits & extra ordinary items 30 36 38 20 26 28

Prior Period Debit/(Credit) Charges 0 0 0 0 0 0

Reasonable Return / Return on

Equity 405 601 966 0 0 0

Interest on Working Capital 808 1237 1387 0 0 0

Contribution to Contingency

Reserves 75 89 122 0 0 0

Total 7984 9308 10814 5686 6268 6882

Expenses on account of Generation

4.156 In this Section, the Commission in accordance with TNERC (Terms and Conditions

for determination of Tariff) Regulations, 2005 has analysed the expenses on account

of Generation business of TANGEDCO from FY 2013-14 to FY 2015-16 submitted

by TANGEDCO

4.157 In respect of components of Tariff for Generating Stations, Regulation-36 of TNERC

Tariff Regulations, 2005 states as under:

“36. Components of Tariff



June 2013

4. The tariff for sale of power by the Generating Companies shall be of two part namely

the Fixed Charges (recovery of annual capacity charges) and variable (energy)

charges.

5. The Fixed (annual capacity) charges shall consist of the following elements:

f) Interest on Loan Capital;

g) Depreciation

h) Return on Equity;

i) Operation and Maintenance expenses; and

j) Interest on Working Capital:

6. The energy (variable) charges shall cover fuel cost.”

4.158 Commission in accordance with its regulations is approving the capacity charges and

variable cost on account of own generating stations and approach for the same is

detailed below.

Capacity charges for own generating stations

4.159 In above sections, Commission has approved the fixed expenses with respect to

generating stations for the first control period.

a) O&M expenses – Refer to Table 192 and Table 194

b) Depreciation – Refer to Table 198

c) Interest on long term loans – Refer to Table 204

d) Return on Equity – Refer to Point 4.138

e) Interest on Working Capital – Refer to Table 208

f) Other Debits – Refer to Table 211

4.160 With respect to other income, TANGEDCO has considered an escalation of 5% based

on its provisional accounts for FY 2011-12. Due to the fact that TANGEDCO has

projected the other income based on its provisional accounts, Commission is

accepting the other income submitted by TANGEDCO for its own generating stations

provisionally.

4.161 For new thermal and hydro stations, Commission is provisionally approving the fixed

costs for the second control period. However, Commission reiterates its direction

given to TANGEDCO in earlier section to submit a separate Petition for approval of

capital cost of new generating stations on finalization of which necessary adjustments

have to be made to the provisionally approved expenses.

4.162 Based on above submissions, the summary of fixed expenses for own generating

stations as proposed by TANGEDCO and approved by the Commission in this order

for the second control period are tabulated below.



June 2013

ETPS

Table 215: Capacity charges approved for ETPS (Rs. Cr)

Parameter Petition Commission

FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016

Depreciation 37.80 37.85 37.90 37.54 39.56 39.90

Interest on Loan Capital 11.07 23.48 19.68 105.10 104.47 100.91

Return on Equity 32.97 33.03 33.08 0.00 0.00 0.00

Operation and maintenance exp 130.47 141.81 158.53 122.51 131.40 141.43

Interest on Working Capital 30.65 31.11 31.79 21.37 21.79 22.10

Other Debit 12.60 13.10 13.63 0.20 0.20 0.20

Net Prior Period Expenses 0.00 0.00 0.00 0.00 0.00 0.00

Less: other income 28.52 29.66 30.85 28.52 29.66 30.85

Net Fixed Costs 227.05 250.72 263.76 258.20 267.76 273.69

MTPS

Table 216: Capacity charges approved for MTPS (Rs. Cr)


FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016

Depreciation 39.66 40.28 41.03 37.37 40.57 43.85


Return on Equity 39.44 40.32 41.33 0.00 0.00 0.00



Other Debit 1.70 1.77 1.84 0.20 0.20 0.20



Net Fixed Costs 308.13 334.62 351.33 300.28 320.36 342.60



June 2013

TTPS

Table 217: Capacity charges approved for TTPS (Rs. Cr)


FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016

Depreciation 64.98 66.99 69.42 66.36 69.69 73.33


Return on Equity 59.55 62.27 65.39 0.00 0.00 0.00



Other Debit 7.69 8.00 8.32 0.30 0.30 0.30



Net Fixed Costs 542.20 586.87 592.40 430.84 449.25 470.69

NCTPS

Table 218: Capacity charges approved for NCTPS (Rs. Cr)


FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016

Depreciation 64.86 66.15 67.70 63.27 64.79 66.58


Return on Equity 65.76 67.69 69.90 0.00 0.00 0.00



Other Debit 26.13 27.17 28.26 0.40 0.40 0.40



Net Fixed Costs 541.13 559.05 536.14 359.31 368.19 379.25

NCTPS – Stage II

Table 219: Capacity charges approved for NCTPS – Stage II (Rs. Cr)


FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016

Depreciation 0.00 186.92 187.69 124.61 186.92 187.69


Return on Equity 122.09 244.69 245.73 0.00 0.00 0.00



Other Debit 0.00 0.00 0.00 0.00 0.00 0.00



Net Fixed Costs 895.01 1142.29 1082.12 602.21 1031.47 1014.46



June 2013

Mettur – Stage III

Table 220: Capacity charges approved for Mettur-Stage III (Rs. Cr)


FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016

Depreciation 126.61 127.04 127.49 86.37 127.04 127.49


Return on Equity 149.37 149.88 150.42 0.00 0.00 0.00



Other Debit 0.00 0.00 0.00 0.00 0.00 0.00



Net Fixed Costs 773.41 751.70 727.82 343.03 596.34 584.02

Ennore Expansion

Table 221: Capacity charges approved for Ennore Expansion (Rs. Cr)


FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016

Depreciation 0.00

36.58

Interest on Loan Capital 215.37

67.02

Return on Equity 67.63 0.00

Operation and maintenance exp 23.10 10.03

Interest on Working Capital 26.58

10.53

Other Debit 0.00 0.00

Net Prior Period Expenses 0.00 0.00

Less: other income

0.00

0.00

Net Fixed Costs

332.67

124.16

BBGTPS

Table 222: Capacity charges approved for BBGTPS (Rs. Cr)


FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016

Depreciation 19.81 20.04 20.17 19.81 19.87 19.91


Return on Equity 17.14 17.34 17.43 0.00 0.00 0.00



Other Debit 0.05 0.05 0.06 0.10 0.10 0.10



Net Fixed Costs 115.51 116.51 113.59 48.66 47.03 45.39



June 2013

KGTPS

Table 223: Capacity charges approved for KGTPS (Rs. Cr)


FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016

Depreciation 12.86 13.22 13.49 17.63 17.71 17.86


Return on Equity 11.72 12.09 12.42 0.00 0.00 0.00

Operation and maintence exp 8.36 9.00 9.94 8.11 8.59 9.12


Other Debit 0.14 0.15 0.15 0.06 0.06 0.06



Net Fixed Costs 90.29 90.72 88.37 88.96 87.77 86.83

TGTPS

Table 224: Capacity charges approved for TGTPS (Rs. Cr)


FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016

Depreciation 15.90 16.99 17.39 16.14 16.34 16.55


Return on Equity 14.74 15.63 16.07 0.00 0.00 0.00



Other Debit 0.51 0.53 0.55 0.10 0.10 0.10



Net Fixed Costs 116.57 117.54 114.30 79.42 79.08 78.91

VGTPS

Table 225: Capacity charges approved for VGTPS (Rs. Cr)


FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016

Depreciation 19.11 19.68 20.43 21.99 22.30 22.50


Return on Equity 17.66 18.44 19.38 0.00 0.00 0.00



Other Debit 0.00 0.00 0.00 0.20 0.20 0.20



Net Fixed Costs 153.80 150.55 146.20 157.02 156.45 155.72



June 2013

Erode Hydro generation Circle (including Bhavani Barrage and Bhavani Kattalai)

Table 226: Capacity charges approved for Erode Hydro Generation Circle (Rs. Cr)


FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016

Depreciation 35.90 35.92 35.96 21.45 58.62 61.73


Return on Equity 44.60 44.65 44.70 0.00 0.00 0.00



Other Debit 0.10 0.11 0.11 0.12 0.12 0.12



Net Fixed Costs 284.77 283.66 274.92 218.36 332.20 337.37

Kundah Hydro generation Circle

Table 227: Capacity charges approved for Kundah Hydro Generation Circle (Rs. Cr)


FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016

Depreciation 25.39 25.49 26.10 25.19 25.23 25.25


Return on Equity 29.97 30.53 31.54 0.00 0.00 0.00



Other Debit 0.17 0.17 0.18 0.20 0.20 0.20



Net Fixed Costs 172.53 191.16 201.13 201.80 202.44 203.51

Tirunelveli Hydro generation Circle

Table 228: Capacity charges approved for Tirunelveli Hydro generation circle (Rs. Cr)


FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016

Depreciation 14.36 14.99 16.44 12.19 12.53 13.07


Return on Equity 15.55 17.06 19.27 0.00 0.00 0.00



Other Debit 3.07 3.19 3.32 0.10 0.10 0.10



Net Fixed Costs 150.99 149.43 149.86 101.31 113.76 118.42



June 2013

Kadamparai Hydro generation Circle

Table 229: Capacity charges approved for Kadamparai Hydro Generation Circle (Rs. Cr)


FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016

Depreciation 10.53 12.26 14.31 10.58 10.60 10.63


Return on Equity 12.53 15.27 18.39 0.00 0.00 0.00



Other Debit 0.00 0.00 0.00 0.10 0.10 0.10



Net Fixed Costs 82.02 95.21 106.79 75.68 76.68 78.02

4.163 The recovery of capacity charges are governed by Regulation-42 of TNERC Tariff Regulations, 2005 which states as under:

“42. Recovery of Capacity Charges

3. Full capacity charges (Fixed Charges) shall be recoverable at target availability

specified in clause (1) of Regulation 37.

4. Recovery of capacity charges below the level of target availability will be on pro rata

basis. At zero availability, no capacity charges shall be payable.…”

4.164 The above capacity charges as determined by the Commission are to be recovered

when TANGEDCO is able to meet the target in terms of norms set by the

Commission. The norms specified for recovery of fixed charges as per TNERC

regulation are stipulated below:


The norms of operation for the Thermal Generating Stations shall be as

under:

(i) Target availability for recovery of full capacity (fixed) charges

(a) All Thermal Generating stations in Tamil Nadu except Ennore

Thermal Power Generating Station 80%

(b) Ennore Thermal Power Generating Station 50% (Till Renovation

and Modernization works in all units are completed)

.........”



June 2013

4.165 In this order Commission has approved higher PLFs based on historical performance

for few own generating stations for estimating energy availability. However, in line

with Commission’s regulations the recovery of capacity charges will be guided by the

norms mentioned above.

Variable cost for own generating stations

4.166 The Commission has worked out the variable cost for various generating stations on

the basis of data approved fuel parameters for FY 2012-13 and considering the norms

specified in the regulation.

4.167 The variable cost as determined by the Commission in respect of various generating

stations of TANGEDCO is detailed as under:

Thermal Stations

4.168 As per Regulation 43 (ii) of the Tarff Regulation, the Energy (Variable) charges shall be worked out on the basis of ex-bus energy delivered / sent out from the generating

station. Rate of energy charges is based on the following elements:

a) Price of primary fuel

b) Quantum of primary fuel (coal) in kg required for generation of one kWh of

electricity at generator terminals, which shall be computed on the basis of

Gross Station Heat Rate (less heat contributed by secondary fuel oil) and gross

calorific value of coal.

c) Price of secondary fuel oil

d) Normative quantity of secondary fuel

e) Normative auxiliary consumption

The above elements have been discussed in detail as under:

Price of primary and secondary fuel

4.169 TANGEDCO in its Petition has estimated the fuel cost for the control period by

considering an escalation of 5% over its FY 2012-13 TANGEDCO has submitted that

it has considered 5% escalation for fuel costs in order to take care of fuel cost

adjustments for the purpose of estimating power cost.

4.170 It is pertinent to mention that with regards the escalation fuel costs , the Commission

has already approved Fuel Price Cost Adjustment (FPCA) Formulae in Page number

294 of its last tariff order dated March 30, 2012 which is reproduced below:

“…

9.4.6 The Commission is of the opinion that the Fuel Price Adjustment charge

formula would enable the TANGEDCO to recover the actual cost of the fuel

incurred and the actual cost of the power purchase, if the same is at variance

from the figures approved by the Commission in this Tariff Order.



June 2013

Section 62 (4) of the Electricity Act 2003 also mandates that the Commission

to provide for mechanism to pass through of variation of Fuel and Power

Purchase cost by specifying the Fuel surcharge formula

9.4.6.6. In most of the comparable States like Maharashtra, Gujarat, Andhra

Pradesh, Kerala, etc, FPCA mechanism is in place.

9.4.6.7. The Commission in this Order is approving FPAC formulae to reflect

change in fuel cost for TANGEDCO’s own Thermal Stations and Power

Purchase from other sources which are due to reasons beyond the control of

TANGEDCO,...”

4.171 Hence, Commission is consciously not considering any escalation over the fuel price.

Commission has considered the fuel price for the second control period as that

approved for FY 2012-13 in this order. If there is variation of actual cost of fuel as

compared to what has been approved by the Commission, TANGEDCO can claim the

differential amount of power purchase cost through FPCA mechanism. The fuel cost

filed by TANGEDCO and approved by the Commission for second control period is

tabulated below.

4.172 For new generating stations, TANGEDCO has proposed a higher fuel cost compared

to existing thermal stations. In response to Commission’s query, TANGEDCO has

submitted that keeping in view fuel supply constraints it has considered a blending

ratio of 58:42 (Domestic:Imported). Commission is of the view that the boilers are

designed to operate efficiently at a particular GCV of coal and any abnormal variation

in this mix can make the plant operate inefficiently. In view of this Commission has

considered the fuel cost for the new generating stations equal to that approved for

existing stations and directs TANGEDCO to make appropriate arrangements for fuel

supply.

Table 230: Cost of primary fuel approved by the Commission for second control period

Name of the

Power Station Units

Petition Commission

FY 2013-

14

FY 2014-

15

FY 2015-

16

FY 2013-

14

FY 2014-

15

FY 2015-

16

Ennore TPS Rs./Tonne 2575 2704 2839 2841 2841 2841

Tuticorin TPS Rs./Tonne 4494 4719 4955 3659 3659 3659

Mettur TPS Rs./Tonne 3907 4102 4307 3916 3916 3916

North Chennai TPS Rs./Tonne 3359 3591 3594 3407 3407 3407



Basin Bridge GTPS Rs./MT 51065 53618 56299 40625 40625 40625



NCTPS – Stage II Rs./Tonne 4312 4528 4754 3407 3407 3407

MTPS – Stage III Rs./Tonne 4864 5107 5363 3916 3916 3916

Ennore Expansion Rs./Tonne 2841



June 2013

Table 231: Cost of secondary fuel approved by the Commission for second control period

Name of the

Power Station Units

Petition Commission

FY 2013-

14

FY 2014-

15

FY 2015-

16

FY 2013-

14

FY 2014-

15

FY 2015-

16

Ennore TPS Rs./kL 50691 53226 55887 49112 49112 49112

Tuticorin TPS Rs./kL 47137 49494 51969 47916 47916 47916

Mettur TPS Rs./kL 42678 44812 47052 47417 47417 47417

North Chennai TPS Rs./kL 51690 54274 56988 47346 47346 47346

NCTPS – Stage II Rs./kL 51690 54274 56988 47346 47346 47346

MTPS – Stage III Rs./kL 42678 44812 47052 47417 47417 47417

Ennore Expansion Rs./kL

55887

49112


4.173 For the second control period, TANGEDCO in its Petition for thermal stations except

for ETPS and NCTPS has considered the gross calorific value of primary and

secondary fuel equal to its estimated gross calorific value of primary and secondary

fuels for FY 2012-13. TANGEDCO has not provided adequate reasons for its

consideration of varying calorific value for ETPS and NCTPS.

4.174 For new generating stations, TANGEDCO has considered GCV of fuels equivalent to that of existing generating stations. However, there was marked difference in price of

fuel claimed for new generating stations and existing generating stations. In response

to Commission’s query TANGEDCO has revised the GCV of the fuel for new

generating stations corresponding to the blending ratio of 58:42.

4.175 Commission has considered the gross calorific value of primary and secondary fuels

for the second control period as that approved for FY 2012-13. For new generating

stations, the Commission has considered the gross calorific value of fuels equivalent

to that of the existing thermal stations. The gross calorific value filed by TANGEDCO

and approved by the Commission for the second control period is given below.

Table 232: GCV of primary fuel approved by the Commission

Name of the Power

Station Units

Petition Commission

2013-14 2014-15 2015-16 2013-14 2014-15 2015-16

Ennore TPS kCal/Kg 3150 3110 3080 3235 3235 3235

Tuticorin TPS kCal/Kg 4320 4320 4320 3405 3405 3405

Mettur TPS kCal/Kg 3562 3562 3562 3551 3551 3551

North Chennai TPS kCal/Kg 3588 3591 3594 3615 3615 3615

Tirumakottai GTPS kCal/SCM 10000 10000 10000 10000 10000 10000

Kuttalum GTPS kCal/SCM 10000 10000 10000 10000 10000 10000

Basin Bridge GTPS kCal/Kg 10572 10572 10572 10572 10572 10572

Valathur - Unit 1 kCal/SCM 10000 10000 10000 10000 10000 10000

Valathur - Unit 2 kCal/SCM 10000 10000 10000 10000 10000 10000

NCTPS - Stage II kCal/Kg 3588 3588 3588 3615 3615 3615



June 2013

Name of the Power

Station Units

Petition Commission

2013-14 2014-15 2015-16 2013-14 2014-15 2015-16

Mettur Stage III kCal/Kg 3562 3562 3562 3551 3551 3551

Ennore Expansion kCal/Kg 3080 3235

Table 233: GCV of secondary fuel approved by the Commission

Name of the Power Station Units Revised Submission Commission

2013-14 2014-15 2015-16 2013-14 2014-15 2015-16

Ennore TPS kCal/Lt 10,470 10,480 10,470 10502 10502 10502

Tuticorin TPS kCal/Lt 10,645 10,645 10,645 10639 10639 10639

Mettur TPS kCal/Lt 10,104 10,104 10,104 10466 10466 10466

North Chennai TPS kCal/Lt 10,355 10,357 10,368 10343 10343 10343

NCTPS - Stage II kCal/Lt 10,355 10,357 10,368 10343 10343 10343

Mettur Stage III kCal/Lt 10,104 10,104 10,104 10466 10466 10466

Ennore Expansion kCal/Lt - - 10,470

10502

Station heat rate

4.176 TANGEDCO in its Petition has submitted that SHR proposed by it for the own

generating stations after considering factors such as condition of plan, age of the

plant, coal quality etc. Commission reiterates its view that reasons specified by

TANGEDCO are not appropriate and Commission is guided by clause 37 (3) of

TNERC tariff regulations for approving SHR.

“37. Norms for operation

-------

(iii) Gross Station Heat Rate

(a) .Norms for the existing Coal-based Thermal Power Generating Stations Station Heat Rate

1. ETPS 3200 kcal/kwh

2. TTPS 2453 kCal/kWh .

3. MTPS 2500 kCal/kWh

4. NCTPS 2393 kCal/kWh

(b) Norms for the new Thermal Power Generating Stations

200/210/250 MW sets 500 MW and above sets

During Stabilization period 2600 KCal/kWh 2550 Kcal/kWh

Subsequent period 2500 KCal/kWh 2450 Kcal/kWh

Note-1 : In respect of 500 MW and above units where the boiler feed pumps are

electrically operated, the heat rate of 40 kCal/kWh shall be reduced from the

Generating Station heat rate indicated above.

Note-2 : For Generating Stations having combination of 200/210/250 MW sets and 500 MW

and above sets, the normative gross Generating Station heat rate shall be the weighted

average Generating Station heat rate of various sets.



June 2013

……..

(d) Gas-Turbine / combined cycle Generating Stations

Advanced class machine E/EA/EC/E2 class machine

Open Cycle 2685 Kcal / kWh 2830 Kcal / kWh

Combined cycle 1850 Kcal/ kWh 1950 Kcal / kWh”

4.177 Commission in accordance to its regulations has considered the station heat rate for

thermal stations except of BBGTPS. The generation from BBGTPS station is very

limited. This station is being operated as synchronous condenser as facility was

available for operating the gas turbines as synchronous condenser. The gas turbines is

started and brought upto full speed after which the unit is synchronized with the grid.

Thereafter the fuel supply is cut off and the gas turbine slows down and finally gets

decoupled from the generator through the operation of a clutch. The generator

continues to be in synchronism with the grid but operates as synchronized condenser.

In this process it supplies VAR to system for compensation. It is understood that this

kind of operation of Basin Bridge Gas Turbine Station has resulted in improving the

voltage profile in the surrounding area and also improved the real power generation of

North Chennai TPS. Hence, Commission approves a relaxed SHR during the second

control period for BBGTPS as that approved for FY 2012-13.

4.178 For new generating stations considering stabilization period in accordance to its regulation, Commission has approved a relaxed SHR during the year of

commissioning. The SHR for thermal stations filed by the Petitioner and approved by

the Commission is given below.

Table 234: Station heat rate (kCal/kWh) approved by the Commission

Name of the Power Station

Petition Commission

2013-14 2014-15 2015-16 2013-14 2014-15 2015-16

Ennore TPS 3906 3858 3822 3200 3200 3200

Tuticorin TPS 2705 2705 2705 2453 2453 2453

Mettur TPS 2500 2500 2500 2500 2500 2500


Tirumakottai GTPS 1850 1850 1850 1850 1850 1850

Kuttalum GTPS 1850 1850 1850 1850 1850 1850

Basin Bridge GTPS 3219 3219 3219 3219 3219 3219

Valathur - Unit 1 1850 1850 1850 1850 1850 1850

Valathur - Unit 2 1850 1850 1850 1850 1850 1850

NCTPS - Stage II 2450 2450 2450 2500 2450 2450

Mettur Stage III 2450 2450 2450 2500 2450 2450

Ennore Expansion 2450 2550

Auxiliary consumption and Secondary fuel oil consumption

4.179 In chapter 4, Commission has approved auxiliary consumption for arriving at the

energy availability. Commission has considered the same auxiliary consumption for

estimating the energy charges. The auxiliary consumption filed and approved by the

Commission is tabulated below.



June 2013

Table 235: Auxiliary consumption approved by the Commission for estimating energy charges

Name of the Power Station Petition Commission

2013-14 2014-15 2015-16 2013-14 2014-15 2015-16

Ennore TPS 15.00% 15.00% 15.00% 15.00% 15.00% 15.00%

Tuticorin TPS 8.50% 8.50% 8.50% 8.50% 8.50% 8.50%

Mettur TPS 8.55% 8.55% 8.55% 8.50% 8.50% 8.50%

North Chennai TPS 8.50% 8.50% 8.50% 8.50% 8.50% 8.50%

Tirumakottai GTPS 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%

Kuttalum GTPS 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%

Basin Bridge GTPS 0.99% 0.99% 1.00% 0.99% 0.99% 0.99%

Valathur - Unit 1 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%

Valathur - Unit 2 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%

NCTPS - Stage II (Unit 1) 8.50% 8.50% 8.50% 8.88% 8.50% 8.50%

NCTPS - Stage II (Unit 2) 8.50% 8.50% 8.50% 8.83% 8.50% 8.50%

Mettur Stage III 8.50% 8.50% 8.50% 8.83% 8.50% 8.50%

Ennore Expansion

8.50%

9.00%

4.180 The norms for secondary fuel oil consumption for thermal stations as per TNERC

tariff regulations, 2005 is given below:

“37. Norms of operation

(iv) Secondary fuel oil consumption

(a) Coal-based Generating Stations:

During stabilization period : 4.5 ml/kWh

Subsequent period (except ETPS) : 2.0 ml/kWh

ETPS : 12.ml/kWh

(b) Lignite fired Generating Stations:

During stabilization period : 5.0 ml/kWh

Subsequent period (except ETPS) : 3.0 ml/kWh”

4.181 Commission has considered the SFO in accordance with its regulations for its thermal

stations. For new generating stations in accordance with Tariff Regulations

considering the stabilization period Commission has approved the SFO consumption.

The SFO consumption for coal based stations filed by TANGEDCO and approved by

the Commission for the second control period is tabulated below.



June 2013

Table 236: SFO approved for coal based stations by the Commission during the second control period

(ml/kWh)

Name of the Power Station Petition Commission

2013-14 2014-15 2015-16 2013-14 2014-15 2015-16

Ennore TPS 12.00 12.00 12.00 12.00 12.00 12.00

Tuticorin TPS 3.00 3.00 3.00 2.00 2.00 2.00

Mettur TPS 1.29 1.29 1.29 2.00 2.00 2.00


NCTPS - Stage II 2.00 2.00 2.00 3.25 2.00 2.00

Mettur Stage III 2.00 2.00 2.00 3.25 2.00 2.00

Ennore Expansion

2.00

4.50

Variable Cost for Thermal Stations

4.182 On the basis of above submissions, the Commission has calculated the variable cost

for thermal power stations of TANGEDCO which is tabulated as under. Commission

has estimated the variable cost – ex bus considering the entire fuel cost including oil.

ETPS

Table 237: Variable Cost approved by the Commission for ETPS




Secondary fuel oil

consumption ml/kWh 12.00 12.00 12.00


Average calorific value of

Coal Kcal/Kg 3235 3235 3235














June 2013

TTPS

Table 238: Variable Cost approved by the Commission for TTPS


Capacity MW 1050 1050 1050


Secondary fuel oil




Coal Kcal/Kg 3405 3405 3405












MTPS

Table 239: Variable Cost approved by the Commission for MTPS




Secondary fuel oil




Coal Kcal/Kg 3551 3551 3551














June 2013

NCTPS

Table 240: Variable Cost approved by the Commission for NCTPS




Secondary fuel oil




Coal Kcal/Kg 3615 3615 3615












NCTPS Stage-II (Unit 1)

Table 241: Variable Cost approved by the Commission for NCTPS stage II (Unit 1)




Secondary fuel oil




Coal Kcal/Kg 3615 3615 3615














June 2013

NCTPS Stage-II (Unit 2)

Table 242: Variable Cost approved by the Commission for NCTPS stage II (Unit 2)




Secondary fuel oil




Coal Kcal/Kg 3615 3615 3615












Mettur stage III

Table 243: Variable Cost approved by the Commission for Mettur Stage III




Secondary fuel oil




Coal Kcal/Kg 3551 3551 3551














June 2013

Ennore Expansion

Table 244: Variable Cost approved by the Commission for Mettur Stage III


Capacity MW

660

Gross Station Heat Rate Kcal/kWh

2550

Secondary fuel oil

consumption ml/kWh

4.50

Average calorific value of oil Kcal/l

10502


Coal Kcal/Kg

3235

Weighted average price of oil Rs./Kl

49112

Average landed cost of coal Rs./MT

2841

Rate energy charges from Oil Paisa/kWh

22.10

Heat contributed from Oil Kcal/kWh

47.26

Heat contributed from Coal Kcal/kWh

2502.74

Specific consumption of coal Kg/kWh

0.77

Rate of energy from Coal Paisa/kWh

219.79

Variable Cost - Gross Paisa/kWh

241.89

Auxiliary Consumption %

9.00%

Variable Cost - Ex bus Paisa/kWh

265.82

Petition Paisa/kWh

256.91

TGTPS

Table 245: Variable Cost approved by the Commission for TGTPS









Net Generation Mus 711.45 711.45 713.40





Petition Ps/ kWh 217.06 227.80 239.18



June 2013

KGTPS

Table 246: Variable Cost approved by the Commission for KGTPS














Petition Ps/ kWh 205.76 216.05 226.98

BBGTPS

Table 247: Variable Cost approved by the Commission for BBGTPS




Average calorific value of Naptha Kcal/Kg 10572 10572 10572

Average Cost of Naptha Rs./ MT 40625.00 40625.00 40625.00

Rate of energy from Naptha Ps/ kWh 1236.96 1236.96 1236.96








Petition Ps/ kWh 1570.50 1649.03 1731.65



June 2013

VGTPS – Unit 1

Table 248: Variable Cost approved by the Commission for VGTPS – unit 1














Petition Ps/ kWh 342.15 359.26 377.45

VGTPS – Unit 2

Table 249: Variable Cost approved by the Commission for VGTPS – unit 2














Petition Ps/ kWh 336.21 353.02 370.67



June 2013

Hydro Generating Stations

4.183 Clause 53 of TNERC Tariff Regulations, 2005 stipulates guidelines for recovery of primary energy charges.

“53. Computation of Annual Energy Charges

(1) The two part tariff for sale of electricity from a hydro power generating

station shall comprise a recovery of annual capacity (fixed) charges and

primary energy charges.

-------

-------

(3) Primary Energy Charges shall be the operating expenses like cost of water,

lubricants, consumables and station supplies.”

4.184 TANGEDCO in accordance to the regulation has claimed primary energy charges for

hydro generating stations on account of water charges, lubricants etc. However,

primary energy charges claimed by TANGEDCO in its Petition for Tirunelveli hydro

generation circle have increased significantly compared to Commissions approval in

last tariff order. TANGEDCO has not provided adequate reasons for increase in

primary energy charges for Tirunelveli hydro generation circle in its Petition. In view

of the above submissions, Commission has considered the primary energy charges as

approved for FY 13 during the second control period for all the hydro stations

including Tirunelveli Hydro Generation circle.

Table 250: Primary energy charges approved by the Commission for Hydro Generation Circles (Rs. Cr)

Generation

Circles

FY 2013-14 FY 2014-15 FY 2015-16


Erode 0.11 0.04 0.11 0.04 0.12 0.04

Kundah 0.01 0.23 0.01 0.23 0.01 0.23

Kadamparai 0.00 0.00 0.00 0.00 0.00 0.00

Tirunelveli 3.12 0.26 3.28 0.26 3.44 0.26

Wind Generating Stations

4.185 The Commission in tariff order date 31st July 2010 ruled that in the order No.3 dated

15-05-2006, the Commission has determined a tariff of Rs.2.75 / unit for the wind

power projects commissioned, and to be commissioned based on agreements executed

prior to May 15, 2006. Accordingly the Commission allowed the rate of Rs. 2.75/

Unit in 31st July 2010 order.

4.186 In its Petition TANGEDCO has considered the transfer price of Rs. 2.75 per unit as cost of generation from its wind mills in accordance to Commission’s order. Hence

Commission is accepting the TANGEDCO submission and is approving the cost of

wind generation from its own wind mills at Rs. 2.75 per unit during the second

control period.



June 2013


4.187 In its Petition TANGEDCO has estimated the energy availability considering the

actual procurement during the first half of FY 2012-13 and using merit order dispatch

principle.

4.188 Apart from own generating stations, TANGEDCO procures power from CGS, IPPs,

renewable energy sources, captive power plants and traders

4.189 This section details out the approach adopted by the Commission in approving the

power purchase expenses for second control period.

Central generating stations

4.190 TANGEDCO in its Petition has projected the power purchase expenses considering a 5% escalation in fixed costs and 4% escalation in per unit variable cost. For the new

generating stations, TANGEDCO has assumed a single part tariff of Rs. 3.50 per unit

during the year of commissioning and escalated it by 4% for arriving at the per unit

variable costs for other years of the control period.

4.191 CERC has issued provisional orders and final orders for approving the capacity charges with respect to central generating stations for the period FY 2009-10 to FY

2013-14. The relevant details from the latest Order from FY 2009-10 to FY 2013-14

available on the website of CERC are tabulated below:

Table 251: Capacity charges approved by CERC for CGS (FY 2013-14)

Particulars

Capacity

(MW) Order

FY 2013-14

(Rs. Crore) TN Share*

Capacity charges

(Rs. Crore)

NLC TS-I 600 T.O. dated 9.04.2012 292.09 100.00% 292.09

NLC-II (Stage-I) 630 T.O. dated 27.06.2011 231.24 32.36% 74.83

NLC-II (Stage-II) 840 T.O. dated 27.06.2011 314.82 32.36% 101.88

NLC TS-I

Expansion 420 T.O. dated 31.08.2010 360.87 53.84% 194.28

NTPC (SR)-

Ramagundam (I &

II) 2100 T.O. dated 31.8.2012 870.19 26.09% 227.03

NTPC-SR Stage-

III 500 T.O. dated 7.5.2012 336.39 27.40% 92.17

NTPC Talcher

Stage-II 2000

Provisional T.O. dated

6.07.2011 1102.37 25.22% 278.00

NTPC - Simhadri 1000 T.O. dated 26.09.2012 1188.24 22.84% 271.40

*TN share including unallocated power based on March 2013 SRPC report

4.192 Commission has considered the capacity charges for all the years of the second

control period equivalent to those estimated for FY 2013-14 after taking into account

TN share and approved capacity charges for CGS by CERC for FY 2013-14.



June 2013

4.193 As regards variable charges, the Commission has considered the per unit variable

charges for all years of the control period to be equivalent to that approved for FY

2012-13 in this order. Commission has not considered any escalation in the energy

charges and directs TANGEDCO to file a FPCA Petition for any variation in actual

energy charges compared to energy charges approved in this order.

4.194 For new coal based CGS, TANGEDCO has considered a single part tariff of Rs. 3.50 per unit. However, Commission is of the view that it is not appropriate to consider

single part tariff as TANGEDCO will be required to pay fixed charges in cases where

the energy is not getting scheduled under MoD. Hence, Commission has provisionally

considered a fixed cost of Rs. 1.50 per unit and variable cost of Rs. 2.00 per unit for

all coal based new CGS. For new nuclear CGS, Commission has considered the single

part tariff equivalent to that of KAIGA. The power purchase expenses approved by

the Commission in its order with respect to CGS have been tabulated below.


Source

Petition Commission

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charge

s (Rs.

Crore)

Total

Cost

(Rs.

Crore)

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charge

s (Rs.

Crore)

Total

Cost

(Rs.

Crore)

NTPC SR

(I&II) 4164 240 1.72 715 955 3952 227 1.68 664 891

NTPC SR III 1074 97 2.02 217 314 988 92 2.00 198 290

NLC TS - I 2937 171 1.79 526 697 3469 292 2.24 777 1069

NLC TS - II 3450 217 2.10 724 941 3188 177 1.98 631 808

NLC TS

Expansion I 1749 234 1.96 343 578 1470 194 1.80 265 459

NTPC Talcher 3567 313 2.21 789 1102 3361 278 1.41 474 752

NTPC

Simhadri 638 81 2.37 151 232 1556 271 1.99 310 581

MAPS 1986 0 2.15 428 428 1568 0 2.04 320 320

KAIGA 1278 0 3.38 432 432 1176 0 3.02 355 355

NTPC ER 0 48 0.00 0 48 0 0 0 0 0

NTPC Dadri 599 17 2.84 170 187 0 0 0 0 0

NTPC Vallur 4676 0 3.64 1703 1703 4955 743 2.00 991 1734

Kudankulum 2426 0 3.64 883 883 1663 0 3.02 502 502

PFBR

Kalpakkam 0 0 0.00 0 0 0 0 3.02 0 0

NLC TS - II

Expansion 1449 0 3.64 527 527 89 13 2.00 18 31

NLC -

Tuticorin 257 0 3.50 90 90 518 78 2.00 104 181

Total 30250 1418 2.54 7697 9116 27954 2366 2.01 5607 7973



June 2013


Source

Petition Commission

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charge

s (Rs.

Crore)

Total

Cost

(Rs.

Crore)

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charge

s (Rs.

Crore)

Total

Cost

(Rs.

Crore)

NTPC SR

(I&II) 4164 252 1.79 744 995 3952 227 1.68 664 891

NTPC SR III 1074 102 2.10 226 328 988 92 2.00 198 290

NLC TS - I 2937 180 1.86 547 726 3469 292 2.24 777 1069

NLC TS - II 3450 228 2.18 753 981 3188 177 1.98 631 808

NLC TS

Expansion I 1749 246 2.04 357 603 1470 194 1.80 265 459

NTPC Talcher 3567 329 2.30 820 1149 3361 278 1.41 474 752

NTPC

Simhadri 678 85 2.46 167 252 1556 271 1.99 310 581

MAPS 1986 0 2.24 445 445 1568 0 2.04 320 320

KAIGA 1278 0 3.51 449 449 1176 0 3.02 355 355

NTPC ER 0 50 0.00 0 50 0 0 0 0 0

NTPC Dadri 638 17 2.95 188 206 0 0 0 0 0

NTPC Vallur 6704 0 3.75 2514 2514 7092 1064 2.00 1418 2482

Kudankulum 4316 0 3.81 1645 1645 4376 0 3.02 1321 1321

PFBR

Kalpakkam 0 0 0.00 0 0 494 0 3.02 149 149

NLC TS - II

Expansion 1546 0 3.79 585 585 1752 263 2.00 350 613

NLC -

Tuticorin 1219 0 3.64 444 444 2643 397 2.00 529 925

Total 35307 1489 2.80 9884 11373 37086 3255 2.09 7761 11016


Source

Petition Commission

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charge

s (Rs.

Crore)

Total

Cost

(Rs.

Crore)

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charge

s (Rs.

Crore)

Total

Cost

(Rs.

Crore)

NTPC SR

(I&II) 4164 264 1.86 774 1038 3963 227 1.68 666 893

NTPC SR III 1074 107 2.19 235 342 991 92 2.00 198 290

NLC TS - I 1469 189 1.94 284 473 3478 292 2.24 779 1071

NLC TS - II 3450 240 2.27 783 1023 3196 177 1.98 633 809

NLC TS

Expansion I 1749 258 2.12 371 630 1474 194 1.80 265 460

NTPC Talcher 3567 345 2.39 853 1198 3370 278 1.41 475 753

NTPC

Simhadri 678 90 2.56 174 263 1560 271 1.99 311 582

MAPS 1986 0 2.33 462 462 1573 0 2.04 321 321

KAIGA 1278 0 3.65 467 467 1179 0 3.02 356 356

NTPC ER 0 53 0.00 0 53 0 0 0 0 0



June 2013

Source

Petition Commission

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charge

s (Rs.

Crore)

Total

Cost

(Rs.

Crore)

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charge

s (Rs.

Crore)

Total

Cost

(Rs.

Crore)

NTPC Dadri 678 18 3.07 208 227 0 0 0 0 0

NTPC Vallur 7141 0 3.90 2785 2785 7112 1067 2.00 1422 2489

Kudankulum 5544 0 3.90 2162 2162 4388 0 3.02 1325 1325

PFBR

Kalpakkam 0 0 0.00 0 0 792 0 3.02 239 239

NLC TS - II

Expansion 1642 0 3.94 647 647 2220 333 2.00 444 777

NLC -

Tuticorin 1300 0 3.79 492 492 2651 398 2.00 530 928

Total 35721 1564 2.99 10698 12261 37948 3329 2.10 7965 11294


4.195 TANGEDCO in its Petition has projected the power purchase expenses considering a 5% escalation in fixed costs and 4% escalation in per unit variable cost. Although the

liquid fuel IPPs do not fall under MoD. In response to Commission’s query on PPA’s

with respect to IPPs, TANGEDCO has replied that PPA’s with M/s GMR and M/s

SPC are expiring on 15th Feb 2014 and 29

th Feb 2016 respectively in this control

period.

4.196 Commission has considered the capacity charges for all the years of the second

control period equivalent to those estimated for FY 2012-13 after taking into actual

capacity charges paid by TANGEDCO. However with respect to IPPs whose PPA is

expiring in the control period, Commission has not allowed any capacity charges after

the expiry of PPA.

4.197 As regards variable charges, the Commission has considered the per unit variable

charges for all years of the control period to be equivalent to that approved for FY

2012-13 in this order. Commission has not considered any escalation in the energy

charges and directs TANGEDCO to file a FPCA Petition for any variation in actual

energy charges compared to energy charges approved in this order.

4.198 The capacity charges and variable energy charges approved for IPPs by the Commission for the second control period are tabulated below. However, the despatch

of energy from IPPs will be governed by MoD principle.



June 2013


Source

Petition Commission

Units

(MU

)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charge

s (Rs.

Crore)

Total

Charges

(Rs.

Crore)

Units

(MU

)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charge

s (Rs.

Crore)

Total

Charge

s (Rs.

Crore)

GMR * 0 175

0 175 945 147 10.41

147

Samalpatti* 0 128

0 128 472 109 10.18

109

PPN* 0 315

0 315 2103 292 8.55

292

Madurai* 0 137

0 137 455 110 10.96

110

ST-CMS 1819 347 2.41 439 786 1665 364 2.32 385 749

ABAN 375 117 1.91 72 189 783 117 2.00 157 274

Penna 759 62 1.93 147 209 353 58 2.04 72 130

Total 2953 1281 2.23 658 1938 6775 1197

614 1811

*Not getting despatched under MOD


Source

Petition Commission

Units

(MU

)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charge

s (Rs.

Crore)

Total

Charges

(Rs.

Crore)

Units

(MU

)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charge

s (Rs.

Crore)

Total

Charge

s (Rs.

Crore)

GMR 0 183.54 0.00 0.00 183.54 0 0.00 0.00

0.00

Samalpatti* 0 134.12 0.00 0.00 134.12 472 108.96 10.18

108.96

PPN* 0 330.50 0.00 0.00 330.50 2103 292.41 8.55

292.41

Madurai* 0 143.89 0.00 0.00 143.89 455 110.39 10.96

110.39

ST-CMS 1844 364.21 2.51 462.86 827.07 1665 363.63 2.32 385.39 749.03

ABAN 375 123.29 1.99 74.62 197.90 783 117.49 2.00 156.54 274.03

Penna 810 65.16 2.01 162.94 228.10 353 57.88 2.04 72.15 130.03

Total 3029 1344.72 2.31 700.42 2045.14 5830 1050.76

614.08 1664.85



Source

Petition Commission

Units

(MU

)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charge

s (Rs.

Crore)

Total

Charges

(Rs.

Crore)

Units

(MU

)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charge

s (Rs.

Crore)

Total

Charge

s (Rs.

Crore)

GMR 0 192.72 0.00 0.00 192.72 0 0.00 0.00

0.00

Samalpatti* 0 140.83 0.00 0.00 140.83 433 99.88 10.18

99.88

PPN* 0 347.03 0.00 0.00 347.03 2103 292.41 8.55

292.41

Madurai* 0 151.09 0.00 0.00 151.09 455 110.39 10.96

110.39

ST-CMS 1869 382.42 2.61 487.90 870.32 1665 363.63 2.32 385.39 749.03

ABAN 375 129.45 2.07 77.60 207.05 783 117.49 2.00 156.54 274.03



June 2013

Source

Petition Commission

Units

(MU

)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charge

s (Rs.

Crore)

Total

Charges

(Rs.

Crore)

Units

(MU

)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charge

s (Rs.

Crore)

Total

Charge

s (Rs.

Crore)

Penna 810 68.42 2.09 169.46 237.88 353 57.88 2.04 72.15 130.03

Total 3054 1411.96 2.41 734.96 2146.92 5791 1041.68

614.08 1655.77


Non conventional energy sources and Captive power plants

4.199 TANGEDCO in its Petition has projected the power purchase expenses from non

conventional energy sources and captive power plants considering a 5% escalation in

per unit energy charges.

4.200 Commission has adopted the following approach for estimation of power purchase

expenses from non conventional sources and captive power plants

a) For existing purchase from renewable energy sources and captive

power plants, Commission has considered the per unit energy charges

for all the years of the second control period equal to that approved

for FY 2012-13 based on TANGEDCO’s provisional estimate of

actual energy charges.

b) For new cogeneration plants, Commission has assumed the energy

and fixed charges in accordance to that approved by the Commission

in its tariff order on determination of tariff for procurement of power

from Bagasse based Cogeneration plants dated 31st July 2012.

4.201 The power purchase expenses from renewable energy sources and captive power

plants filed by TANGEDCO and approved by the Commission are tabulated below.

Table 258: Power purchase expenses from non conventional sources and CPP approved by the


Source

Petition Commission

Units

(MU)

Variable

Cost

(Rs./Unit )

Total Cost

(Rs. Crore)

Units

(MU)

Variable

Cost

(Rs./Unit )

Total Cost

(Rs. Crore)

Captive 719 4.58 329 595 3.94 234

Wind 5320 3.42 1818 7145 3.12 2229

Biomass 799 4.98 398 11 4.45 5

Cogeneration 2562 4.08 1045 1428 3.51 501

New Cogeneration Plants 0

502 3.85 193

Solar 208 4.96 103 16 4.62 7

NTPC NVVN 694 4.17 289 35 4.45 16

Total 10302 3.87 3983 9732 3.27 3186



June 2013



Source

Petition Commission

Units

(MU)

Variable

Cost

(Rs./Unit )

Total Cost

(Rs. Crore)

Units

(MU)

Variable

Cost

(Rs./Unit )

Total Cost

(Rs. Crore)

Captive 755 4.8 363 595 3.94 234

Wind 5586 3.59 2005 7145 3.12 2229

Biomass 839 5.23 439 11 4.45 5

Cogeneration 3049 4.28 1306 1428 3.51 501

New Cogeneration Plants 0

802 3.96 318

Solar 768 5.21 400 16 4.62 7

NTPC NVVN 694 4.38 304 35 4.38 15

Total 11691 4.12 4816 10032 3.30 3310



Source

Petition Commission

Units

(MU)

Variable

Cost

(Rs./Unit )

Total Cost

(Rs. Crore)

Units

(MU)

Variable

Cost

(Rs./Unit )

Total Cost

(Rs. Crore)

Captive 793 5.04 400 595 3.94 234

Wind 5866 3.77 2210 7145 3.12 2229

Biomass 881 5.49 484 11 4.45 5

Cogeneration 3126 4.5 1406 1428 3.51 501

New Cogeneration Plants 0 0 0 805 4 322

Solar 769 5.47 421 16 4.62 7

NTPC NVVN 694 4.6 319 35 4.45 16

Total 12128 4.32 5239 10035 3.30 3315

Power purchase from traders and other sources

4.202 TANGEDCO has proposed the purchase of power from traders and estimated the

expenses from that purchase by considering an escalation of 5% on per unit energy

charges of FY 2012-13. However, TANGEDCO has not provided any information of

sources from which the proposed purchase from traders is being procured.

4.203 TANGEDCO has later revised the cost of power procurement from bilateral to Rs.

5.13/unit in FY 2012-13 as against Rs. 3.12/unit estimated in Petition. Considering

improved power availability and TANGEDCO’s revised cost of power procurement

from traders in FY 2012-13, Commission is not approving the additional power

procurement from traders proposed by TANGEDCO.

4.204 In response to Commission’s query on case 1 bidding, TANGEDCO has submitted

that 500 MW of power is being procured under medium term through case-1 bidding

from bilateral transactions with M/s National Energy Trading and Services (Lanco),

M/s Adani Enterprises Ltd and M/s Jindal Power Limited.



June 2013

4.205 Commission has approved the levellized tariff for procurement of power from these

sources through orders on P.P.A.P. No. 7 of 2012 and P.P.A.P No. 1 of 2012 dated

17th April 2013 and 21

st June 2012 respectively. Commission has considered the

approved levellized tariffs in these orders for the purpose of estimation of power

purchase expenses.

Table 261: Levelized tariff approved by the Commission for case-1 bidding

Source Capacity (MW) Duration Levellized Tariff

(in Rs./Unit)

M/s Jindal Power 200 June 16, 2013 to Nov 30, 2015 4.92

M/s Adani Power 200 June 16, 2013 to Dec 31, 2015 4.99

M/s Lanco Power 100 June 16, 2013 to May, 2016 4.88

4.206 Power from case-1 bidding is procured under two-part tariff. Commission has

considered the capacity charges in Rs./Unit as per the quotation of the bidders and

then arrived at the variable cost per unit by reducing the per unit capacity charges

from the approved levellized tariff. The per unit capacity charges considered by the

Commission is tabulated below.

Table 262: Capacity charges considered by the Commission for procurement of power under case-1

bidding (Rs./Unit)

Source FY 2013-14 FY 2014-15 FY 2015-16

Jindal Power 2.11 2.20 2.35

Adani Power 1.50 1.69 1.75

Lanco Power 1.72 2.45 2.45

4.207 The power purchase expenses approved by the Commission from the second control

period from these sources are given below.

Table 263: Power purchase expenses approved for case 1-bidding and traders – FY 2013-14

Source

Petition Commission

Units

(MU)

Total Cost

(Rs./Unit )

Total Cost

(Rs. Crore)

Units

(MU)

Total Cost

(Rs./Unit )

Total Cost

(Rs. Crore)

Traders 1413 3.28 463

Case - 1 Bidding

3468 4.94 1713

Total 1413 3.28 463 3468 4.94 1713


Source

Petition Commission

Units

(MU)

Total Cost

(Rs./Unit )

Total Cost

(Rs. Crore)

Units

(MU)

Total Cost

(Rs./Unit )

Total Cost

(Rs. Crore)

Traders 804 3.44 277

Case - 1 Bidding

4380 4.94 2163

Total 804 3.44 277 4380 4.94 2163



June 2013


Source

Petition Commissions

Units

(MU)

Total Cost

(Rs./Unit )

Total Cost

(Rs. Crore)

Units

(MU)

Total Cost

(Rs./Unit )

Total Cost

(Rs. Crore)

Traders 933 3.62 338

Case - 1 Bidding

3370 4.94 1664

Total 933 3.62 338 3370 4.94 1664

Power Grid Corporation of India Limited (PGCIL) Charges

4.208 TANGEDCO has proposed PGCIL charges considering an escalation of 5%. In

addition, TANGEDCO has proposed ABTPGCIL charges under PGCIL charges. In

response to Commission’s query, TANGEDCO has replied that they have

inadvertently claimed ABTPGCIL charges under PGCIL charges and these charges

correspond to UI. Hence, Commission is not approving these charges claimed by

TANGEDCO as it has not considered UI as a source of power. Also, Commission is

not considering the reactive energy charges and will revisit at the time of true-up.

4.209 It is pertinent to mention that with new CGS stations commissioning in FY 2013-14,

the transmission charges are expected to increase due to increase in wheeled energy,

Hence, Commission has considered the PGCIL wheeling charges in accordance with

the submission of TANGEDCO from FY 2013-14 to FY 2015-16. The PGCIL Cost

as approved by the Commission from FY 2013-14 to FY 2015-16 in this Order is

tabulated below:

Table 266: PGCIL Charges approved by the Commission for the second control period - Rs. Cr



PGCIL - SR and ER wheeling 578 578 607 607 637 637

PGCIL - Reactive energy 19 0 19 0 21 0

ABTPGCIL 345

362

380

Total 942 578 988 607 1038 637

Intrastate Transmission Charges

4.210 TANGEDCO has claimed intrastate transmission charges for the second control

period based on the ARR estimate as per TANTRANSCO Petition.

4.211 However, Commission has determined the transmission charges applicable to

TANGEDCO considering approved ARR of TANTRANSCO in Order on T.P. No. 2

of 2013 and the allotted capacity of TANGEDCO. The intrastate transmission charges

approved by the Commission for the second control period are given below.



June 2013

Table 267: Transmission Charges payable to TANTRANSCO for the second control period (Rs. Cr.)

Parameter

2013-14 2014-15 2015-16


Transmission charges

payable to TANTRANSCO 2329 1533 2888 2850 3629 3632

Merit order Dispatch

4.212 The Commission in accordance with Regulation 75 (1) of TNERC (Terms and

Conditions for Determination of Tariff) Regulations, 2005 has determined the power

purchase cost for various sources from which energy is available in FY 2012-13.

Regulation 75(1) of the TNERC (Terms and Condition for Determination of Tariff)

Regulation, 2005 states as under:

“75. Cost of Power Purchase

1. The Distribution Licensee shall procure power on least cost basis and strictly

on Merit Order Despatch and shall have flexibility to procure power from

any source in the country”.

4.213 For the purpose of determination of power purchase cost, the Commission has

followed the methodology given below:

i. Energy available from Must-Run Power plants will be dispatched first

ii. Energy availability from Hydro generating plants will not be subjected to

MoD

4.214 The Tamil Nadu Electricity Grid Code stipulates following guidelines for scheduling

and despatch of power.

“8. Scheduling and Despatch

2. (b) SLDC shall regulate the overall State generation in such a manner that

generation from following types of power stations where energy potential, if

unutilized, goes, as a waste shall not be curtailed

• Run of river or canal based hydro stations.

• Hydro-station where water level is at peak reservoir level or expected to

touch peak reservoir level (as per inflows).

• Wind Power Stations and Renewable Energy Sources

• Nuclear Power Station”

4.215 The total energy availability from must run power plants estimated by the

Commission for the second control period is given below:



June 2013

Table 268: Energy available from must run plants – MUs

Source Power Procurement Energy Available at TN Periphery

FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016

CGS

MAPS 1568 1568 1573 1500 1500 1504

KAIGA 1176 1176 1179 1125 1125 1128

Kundakulum 1663 4376 4388 1591 4186 4197

PFBR

Kalpakam 0 494 792 0 473 758

Sub Total 4408 7614 7932 4216 7284 7587

Wind (Private) 7145 7145 7145 7145 7145 7145

Wind Mills -

TANGEDCO 12 12 12 12 12 12

Cogeneration 1930 2230 2233 1930 2230 2233

Solar 16 16 16 16 16 16

NTPC NVVN 35 35 35 35 35 35

Biomass 11 11 11 11 11 11

Total 13557 17064 17384 13366 16733 17039

4.216 For hydro-energy generation, TANGEDCO will majorly incur only fixed expenses.

Also, Commission is of the view that TANGEDCO can plan its energy despatch from

hydro generation suitably meeting its load requirements. Hence, Commission has not

subjected the energy available from hydro generating stations under MoD. The energy

available from hydro generating stations is tabulated below.

Table 269: Energy available from Hydro Generation - in MUs

Source FY 2014 FY 2015 FY 2016

Hydro Stations 4844 4844 4844

4.217 After factoring in the energy available from all the above listed sources, the

Commission has allowed the remaining energy to be purchased as per the energy

requirement at Tamil Nadu periphery calculated by the Commission on Merit Order

Ranking basis. For arriving at the energy available from CGS must run plants,

Commission has considered an inter-state transmission loss of 4.34%. The energy

required to be purchased on Merit Order Despatch basis is given below:

Table 270: Energy required to be purchased under MoD (Tamil Nadu periphery) - MUs


Energy Requirement (TN Periphery) 67515 73919 77374

Less: Must run plants (CGS) 4216 7284 7587

Less: other Must run plants 9150 9450 9452

Less: Hydro 4844 4844 4844

Energy required to be purchased under MoD 49305 52342 55491



June 2013

4.218 The Commission has prepared the Merit Order Despatch on the basis of variable cost

of various power plants. The Commission has considered Merit Order Despatch upto

the energy requirement at TN periphery on the basis of calculation shown above. For

the CGS plants Commission has assumed an inter-state loss of 4.34%. The power

plants will be scheduled in accordance with the increasing trend of variable cost. On

the basis of variable cost, following power plants will get despatched in accordance

with Merit Order Ranking:

Table 271: Merit order ranking of available energy sources for FY 2013-14

Source

Variable

Cost (Rs./

Unit)

Energy

available at

TN Periphery

(MUs)

Cumulative

available

energy (Mus) -

TN Periphery

Energy to be

purchased

(TN

Periphery)

Total Energy to be

purchased (Mus)

NTPC Talcher 1.41 3215 3215 3215 3361

NTPC SR (I&II) 1.68 3781 6996 3781 3952

Vallathur Gas

Power Plant 1.73 1232 8228 1232 1232

NLC TS – I

Expansion 1.80 1406 9634 1406 1470

TGTPS 1.86 711 10346 711 711

KGTPS 1.86 665 11011 665 665

NLC TS - II 1.98 3049 14060 3049 3188

NTPC Simhadri 1.99 1489 15549 1489 1556

ABAN 2.00 783 16332 783 783

NTPC Vallur 2.00 4740 21072 4740 4955

NLC TS - II

Expansion 2.00 84 21156 84 88

NLC - Tuticorin 2.00 496 21651 496 518

NTPC SR III 2.00 945 22597 945 988

Penna 2.04 353 22950 353 353

NLC TS - I 2.24 3469 26419 3469 3469

ST-CMS 2.32 1665 28083 1665 1665

NCTPS 2.55 4494 32577 4494 4494

NCTPS Stage - II 2.72 5429 38006 5429 5429

M/s Jindal Power 2.81 1387 39393 1387 1387

TTPS 2.96 7154 46547 7154 7154

MTPS 3.09 5992 52539 2759 2759


Source

Variable

Cost (Rs./

Unit)

Energy

available at

TN Periphery

(MUs)

Cumulative

available

energy (Mus) -

TN Periphery

Energy to be

purchased

(TN

Periphery)

Total Energy to

be purchased

(Mus)

NTPC Talcher 1.41 3215 3215 3215 3361

NTPC SR (I&II) 1.68 3781 6996 3781 3952

VGTPS 1.73 1232 8228 1232 1232

NLC TS I –

Expansion 1.80 1406 9634 1406 1470

TGTPS 1.86 711 10346 711 711



June 2013

Source

Variable

Cost (Rs./

Unit)

Energy

available at

TN Periphery

(MUs)

Cumulative

available

energy (Mus) -

TN Periphery

Energy to be

purchased

(TN

Periphery)

Total Energy to

be purchased

(Mus)

KGTPS 1.87 665 11011 665 665

NLC TS - II 1.98 3049 14060 3049 3188

NTPC Simhadri 1.99 1489 15549 1489 1556

ABAN 2.00 783 16332 783 783

NTPC Vallur 2.00 6785 23116 6785 7092

NLC TS - II

Expansion 2.00 1676 24792 1676 1752

NLC - Tuticorin 2.00 2529 27321 2529 2643

NTPC SR III 2.00 945 28266 945 988

Penna 2.04 353 28619 353 353

NLC TS - I 2.24 3469 32088 3469 3469

ST-CMS 2.32 1665 33753 1665 1665

M/s Lanco Power 2.43 876 34629 876 876

NCTPS 2.55 4494 39123 4494 4494

NCTPS Stage - II 2.61 8176 47299 8176 8176

M/s Jindal Power 2.72 1752 49051 1752 1752

TTPS 2.96 7154 56204 3291 3291


Source

Variable

Cost (Rs./

Unit)

Energy

available at

TN Periphery

(MUs)

Cumulative

available

energy (MUs) -

TN Periphery

Energy to be

purchased

(TN

Periphery)

Total Energy to

be purchased

(MUs)

NTPC Talcher 1.41 3224 3224 3224 3370

NTPC SR (I&II) 1.68 3791 7015 3791 3963

VGTPS 1.73 1235 8251 1235 1235

NLC TS I

Expansion 1.80 1410 9661 1410 1474

TGTPS 1.86 713 10374 713 713

KGTPS 1.87 667 11041 667 667

NLC TS - II 1.98 3058 14099 3058 3196

NTPC Simhadri 1.99 1493 15591 1493 1560

ABAN 2.00 783 16374 783 783

NTPC Vallur 2.00 6803 23178 6803 7112

NLC TS - II

Expansion 2.00 2124 25302 2124 2220

NLC - Tuticorin 2.00 2536 27837 2536 2651

NTPC SR III 2.00 948 28785 948 991

Penna 2.04 353 29138 353 353

NLC TS - I 2.24 3478 32617 3478 3478

ST-CMS 2.32 1665 34281 1665 1665

M/s Lanco Power 2.43 878 35160 878 878



June 2013

Source

Variable

Cost (Rs./

Unit)

Energy

available at

TN Periphery

(MUs)

Cumulative

available

energy (MUs) -

TN Periphery

Energy to be

purchased

(TN

Periphery)

Total Energy to

be purchased

(MUs)

NCTPS 2.55 4507 39666 4507 4507

M/s Jindal Power 2.57 1171 40837 1171 1171

NCTPS Stage - II 2.61 8198 49035 8198 8198

Ennore Expansion 2.66 1049 50085 1049 1049

TTPS 2.96 7173 57258 5406 5406

4.219 The fixed cost as per Regulations or PPA has been allowed for the Power Plants which are not scheduled as per Merit Order Despatch shown above.

4.220 The Merit Order Despatch shown above has been considered assuming an idealistic

scenario in which the energy is available from all the Power Plants listed in the Merit

Order Ranking throughout the year. However due to following reasons, TANGEDCO

may require to draw power from other available sources based on MOD principle.

a) Availability of energy is considered on annual basis and there could be differences on

monthly/daily basis.

b) Restriction of power flow from other regions due to corridor constraints.

c) Delay in commissioning of new CGS and own generating stations

d) With reduced load shedding, the demand may increase and exceed the consumption

estimates

e) During non wind seasons, the availability from WEGs might decrease resulting in

demand-supply mismatch.

4.221 Hence, Commission allows TANGEDCO to draw power from the other available

regulated sources during these circumstances. However, TANGEDCO shall follow

the MOD and optimize the power purchase cost on the basis of Merit Order Ranking.

Commission directs TANGEDCO to use the energy availability from its hydro power

plants judiciously in order to address the short fall of energy availability during non

wind seasons.

4.222 Commission is of the view that TANGEDCO should project power availability for

shorter time intervals such as monthly to arrive at short term power management

using the sources listed above leading to overall optimization of power purchase cost.

This time interval for projection could be reduced to a fortnight or ten days in due

course

4.223 In this context, Commission directs TANGEDCO to provide the monthly energy

demand and availability and its plan of scheduling power in accordance to MoD

on quarterly basis. For power procurement with variable cost more than Rs. 3.50 per

unit from unapproved sources and sources not getting dispatched under MoD,

TANGEDCO is directed to take prior approval of the Commission before purchasing

energy.



June 2013

Summary of power purchase costs

4.224 The summary of power purchase costs approved by the Commission for the second

control period from own generation and other sources after considering MoD is

tabulated below:

Table 274: Summary of power purchase cost approved by the Commission for FY 2013-14

Source

Petition Commission

Units

(MU)

Capac

ity

Charg

es (Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charges

(Rs.

Crore)

Total

Cost

(Rs.

Crore)

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energ

y

Charg

es (Rs.

Crore)

Total

Cost

(Rs.

Crore)

Own

Generating

Stations

Coal Based

Power Plants

ETPS 987 227 4.35 429 656

258 3.87 0 258

TTPS 6963 542 3.19 2224 2766 7154 436 2.96 2118 2554

MTPS 5990 308 3.04 1823 2131 2758 300 3.09 853 1153

NCTPS 4502 541 2.59 1164 1705 4494 359 2.55 1145 1504

Sub Total 18442 1619 3.06 5640 7259 14406 1354 2.86 4115 5469

Gas Based

Power Plants

TGTPS 669 117 2.17 145 262 711 79 1.86 132 212

KGTPS 614 90 2.06 126 217 665 89 1.86 124 213

VGTPS 1211 154 3.39 411 565 1232 157 1.73 213 370

BBGTPS 59 116 15.71 93 209

116 12.49 0 116

Sub Total 2554 476 3.04 776 1252 2609 441 1.80 469 910

Hydro

Genration

Circles

Erode

5768

285

0 285

4844

218

0 218

Kundah 173

0 173 202

0 202

Tirunelveli 151

3 154 101

0 102

Kadamparai 82

0 82 76

0 76

Wind Mills 0.00

0.00 0 0 12.00

2.75 3 3

Sub Total -

Existing

Stations

26764 2785 2.40 6419 9204 21870 2392 2.10 4588 6980

New Stations

NCTPS Stage

- II 6387 895 3.30 2110 3005 5429 602 2.72 1476 2078

MTPS – Stage

III 3587 773 3.74 1342 2115

343 3.15 0 343

Ennore

Expansion 0 0 0.00

0 0

Sub Total 9974 1668 3.46 3452 5120 5429 945 2.72 1476 2421

Total - Own

Generating 36738 4453 2.69 9871 14324 27298 3337 2.22 6064 9401



June 2013

Source

Petition Commission

Units

(MU)

Capac

ity

Charg

es (Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charges

(Rs.

Crore)

Total

Cost

(Rs.

Crore)

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energ

y

Charg

es (Rs.

Crore)

Total

Cost

(Rs.

Crore)

Stations

Central

Generation

Stations

NTPC SR

(I&II) 4164 240 1.72 715 955 3952 227 1.68 664 891

NTPC SR III 1074 97 2.02 217 314 988 92 2.00 198 290

NLC TS - I 2937 171 1.79 526 697 3469 292 2.24 777 1069

NLC TS - II 3450 217 2.10 724 941 3188 177 1.98 631 808

NLC TS I

Expansion 1749 234 1.96 343 578 1470 194 1.80 265 459

NTPC Talcher 3567 313 2.21 789 1102 3361 278 1.41 474 752

NTPC

Simhadri 638 81 2.37 151 232 1556 271 1.99 310 581

MAPS 1986 0 2.15 428 428 1568 0 2.04 320 320

KAIGA 1278 0 3.38 432 432 1176 0 3.02 355 355

NTPC ER 0 48 0.00 0 48 0 0 0.00 0 0

NTPC Dadri 599 17 2.84 170 187 0 0 0.00 0 0

NTPC Vallur 4676 0 3.64 1703 1703 4955 743 2.00 991 1734

Kudankulam 2426 0 3.64 883 883 1663 0 3.02 502 502

PFBR

Kalpakkam 0 0 0.00

0 0 3.02 0 0

NLC TS - II

Expansion 1449 0 3.64 527 527 89 13 2.00 18 31

NLC -

Tuticorin 257 0 3.50 90 90 518 78 2.00 104 181

Sub Total 30250 1418 2.54 7697 9116 27954 2366 2.01 5608 7973

IPPs

GMR 0 175 0.00 0 175

147 10.41 0 147

Samalpatti 0 128 0.00 0 128

109 10.18 0 109

PPN 0 315 0.00 0 315

292 8.55 0 292

Madurai 0 137 0.00 0 137

110 10.96 0 110

ST-CMS 1819 347 2.41 439 786 1665 364 2.32 385 749

ABAN 375 117 1.91 72 189 783 117 2.00 157 274

Penna 759 62 1.93 147 209 353 58 2.04 72 130

Sub Total 2953 1281 2.23 658 1938 2800 1197 2.19 614 1811

Renewable

Energy

Sources and

CPP

Captive 719 0 4.58 329 329

3.94 0 0

Wind 5320 0 3.42 1818 1818 7145

3.12 2229 2229

Biomass 799 0 4.98 398 398 11

4.45 5 5

Cogeneration 2562 0 4.08 1045 1045 1428

3.51 501 501



June 2013

Source

Petition Commission

Units

(MU)

Capac

ity

Charg

es (Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charges

(Rs.

Crore)

Total

Cost

(Rs.

Crore)

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energ

y

Charg

es (Rs.

Crore)

Total

Cost

(Rs.

Crore)

New

Cogeneration

Plants

0 0 0.00 0 0 502

3.85 194 194

Solar 208 0 4.96 103 103 16

4.62 7 7

Sub Total 9608

3.84 3694 3694 9102

3.23 2936 2936

Other Sources

Trading -

Bilateral &

Exchange

1413

3.28 463 463 0 0 0.00 0 0

Jindal Power 0

0.00 0 0 1387 293 2.81 389 682

Adani Power 0

0.00

208 3.49 0 208

Lanco Power 0

0.00

119 3.16 0 119

UI 0

0.00 0 0 0 0 0.00 0 0

NTPC NVVN 694

4.17 289 289 35 0 4.45 16 16

Sub Total 2107

3.57 753 753 1423 620 2.85 405 1025

Total - Other

Power

Purchase

44917 2699 2.85 12801 15500 41279 4183 2.32 9563 13746

Transmission

Charges

PGCIL - ER &

SR 578

578

PGCIL -

Reactive

Energy

Charges

19

0

ABTPCIL

345

0

Sub Total

942

578

Grand Total 81656 7152 2.78 22672 30766 68578 7521 2.28 15627 23726


Source

Petition Commission

Units

(MU)

Capac

ity

Charg

es (Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charges

(Rs.

Crore)

Total

Cost

(Rs.

Crore)

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energ

y

Charg

es (Rs.

Crore)

Total

Cost

(Rs.

Crore)

Own

Generating

Stations

Coal Based

Power Plants

ETPS 959 251 4.57 438 689

268 3.87 0 268

TTPS 7096 587 3.35 2380 2966 3291 449 2.96 974 1424

MTPS 5990 335 3.26 1952 2286

320 3.09 0 320



June 2013

Source

Petition Commission

Units

(MU)

Capac

ity

Charg

es (Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charges

(Rs.

Crore)

Total

Cost

(Rs.

Crore)

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energ

y

Charg

es (Rs.

Crore)

Total

Cost

(Rs.

Crore)

NCTPS 4639 559 2.72 1260 1819 4494 368 2.55 1145 1513

Sub Total 18684 1731 3.23 6029 7760 7785 1406 2.72 2119 3525

Gas Based

Power Plants

TGTPS 694 118 2.28 158 276 711 79 1.86 133 212

KGTPS 614 91 2.16 133 223 665 88 1.87 124 212

VGTPS 1173 151 3.56 418 569 1232 156 1.73 213 369

BBGTPS 59 117 16.49 98 215

47 12.49 0 47

Sub Total 2541 475 3.18 807 1282 2609 370 1.80 469 840

Hydro

Genration

Circles

Erode

5801

284

0 284

4844

332

0 332

Kundah 191

0 191 202

0 203

Tirunelveli 149

3 153 114

0 114

Kadamparai 95

0 95 77

0 77

Wind Mills 0

0 0 0 12

2.75 3 3

Sub Total -

Existing

Stations

27026 2926 2.53 6839 9765 15250 2501 1.70 2592 5093

New Stations

NCTPS Stage

- II 7774 1142 3.47 2697 3839 8176 1031 2.61 2130 3162

MTPS – Stage

III 3990 752 3.93 1567 2319

596 3.03 0 596

Ennore

Expansion 0 0 0.00

0 0

Sub Total 11764 1894 3.62 4264 6158 8176 1628 2.61 2130 3758

Total - Own

Generating

Stations

38790 4820 2.86 11103 15923 23426 4129 2.02 4723 8851

Central

Generation

Stations

NTPC SR

(I&II) 4164 252 1.79 744 995 3952 227 1.68 664 891

NTPC SR III 1074 102 2.10 226 328 988 92 2.00 198 290

NLC TS - I 2937 180 1.86 547 726 3469 292 2.24 777 1069

NLC TS - II 3450 228 2.18 753 981 3188 177 1.98 631 808

NLC TS I

Expansion 1749 246 2.04 357 603 1470 194 1.80 265 459

NTPC Talcher 3567 329 2.30 820 1149 3361 278 1.41 474 752

NTPC

Simhadri 678 85 2.46 167 252 1556 271 1.99 310 581

MAPS 1986 0 2.24 445 445 1568 0 2.04 320 320



June 2013

Source

Petition Commission

Units

(MU)

Capac

ity

Charg

es (Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charges

(Rs.

Crore)

Total

Cost

(Rs.

Crore)

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energ

y

Charg

es (Rs.

Crore)

Total

Cost

(Rs.

Crore)

KAIGA 1278 0 3.51 449 449 1176 0 3.02 355 355

NTPC ER 0 50 0.00 0 50 0 0 0.00 0 0

NTPC Dadri 638 17 2.95 188 206 0 0 0.00 0 0

NTPC Vallur 6704 0 3.75 2514 2514 7092 1064 2.00 1418 2482

Kudankulam 4316 0 3.81 1645 1645 4376 0 3.02 1321 1321

PFBR

Kalpakkam 0 0 0.00

494 0 3.02 149 149

NLC TS - II

Expansion 1546 0 3.79 585 585 1752 263 2.00 350 613

NLC -

Tuticorin 1219 0 3.64 444 444 2643 397 2.00 529 925

Sub Total 35307 1489 2.80 9884 11373 37086 3255 2.09 7761 11016

IPPs

GMR 0 184 0.00 0 184 0 0 0.00 0 0

Samalpatti 0 134 0.00 0 134

109 10.18 0 109

PPN 0 331 0.00 0 331

292 8.55 0 292

Madurai 0 144 0.00 0 144

110 10.96 0 110

ST-CMS 1844 364 2.51 463 827 1665 364 2.32 385 749

ABAN 375 123 1.99 75 198 783 117 2.00 157 274

Penna 810 65 2.01 163 228 353 58 2.04 72 130

Sub Total 3029 1345 2.31 700 2045 2800 1051 2.19 614 1665

Renewable

Energy

Sources and

CPP

Captive 755

4.80 363 363

3.94 0 0

Wind 5586

3.59 2005 2005 7145

3.12 2229 2229

Biomass 839

5.23 439 439 11

4.45 5 5

Cogeneration 3049

4.28 1306 1306 1428

3.51 501 501

New

Cogeneration

Plants

0

0.00 0 0 802

3.96 318 318

Solar 768

5.21 400 400 16

4.62 7 7

Sub Total 10997

4.10 4512 4512 9402

3.26 3061 3061

Other Sources

Trading -

Bilateral &

Exchange

804

3.44 277 277 0 0 3.44 0 0

Jindal Power 0

0.00 0 0 1752 385 2.72 476 861

Adani Power 0

0.00 0 0

296 3.30 0 296

Lanco Power 0

0.00 0 0 876 215 2.43 213 428

UI 0

0.00 0 0 0 0 0.00 0 0

NTPC NVVN 694

4.38 304 304 35 0 4.38 16 16



June 2013

Source

Petition Commission

Units

(MU)

Capac

ity

Charg

es (Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charges

(Rs.

Crore)

Total

Cost

(Rs.

Crore)

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energ

y

Charg

es (Rs.

Crore)

Total

Cost

(Rs.

Crore)

Sub Total 1498

3.88 581 581 2663 896 2.65 705 1601

Total - Other

Power

Purchase

50831 2834 3.08 15677 18511 51952 5202 2.34 12140 17342

Transmission

Charges

PGCIL - ER &

SR 607

607

PGCIL -

Reactive

Energy

Charges

20

0

ABTPCIL

362

0

Sub Total

989

607

Grand Total 89621 7654 2.99 26780 35423 75378 9330 2.24 16863 26800


Source

Petition Commission

Units

(MU)

Capac

ity

Charg

es (Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charges

(Rs.

Crore)

Total

Cost

(Rs.

Crore)

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energ

y

Charg

es (Rs.

Crore)

Total

Cost

(Rs.

Crore)

Own

Generating

Stations

Coal Based

Power Plants

ETPS 920 264 4.80 441 705

274 3.87 0 274

TTPS 7200 592 3.52 2535 3127 5406 471 2.96 1601 2071

MTPS 5990 351 3.42 2049 2401

343 3.09 0 343

NCTPS 4640 536 2.85 1323 1859 4507 379 2.55 1148 1527

Sub Total 18749 1744 3.39 6348 8092 9913 1466 2.77 2748 4215

Gas Based

Power Plants

TGTPS 697 114 2.39 167 281 713 79 1.86 133 212

KGTPS 593 88 2.27 135 223 667 87 1.87 125 211

VGTPS 1191 146 3.74 445 592 1235 156 1.73 213 369

BBGTPS 59 114 17.32 103 216

45 12.49 0 45

Sub Total 2540 462 3.34 850 1312 2616 367 1.80 471 838

Hydro

Genration

Circles

Erode 6353

275

0 275 4844

337

0 337

Kundah 201

0 201 204

0 204



June 2013

Source

Petition Commission

Units

(MU)

Capac

ity

Charg

es (Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charges

(Rs.

Crore)

Total

Cost

(Rs.

Crore)

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energ

y

Charg

es (Rs.

Crore)

Total

Cost

(Rs.

Crore)

Tirunelveli 150

3 153 118

0 119

Kadamparai 107

0 107 78

0 78

Wind Mills 0

0.00 0 0 12

2.75 3 3

Sub Total -

Existing

Stations

27643 2939 2.61 7202 10140 17384 2570 1.85 3223 5793

New Stations

NCTPS Stage

- II 8275 1082 3.64 3014 4096 8198 1014 2.61 2136 3151

MTPS – Stage

III 4240 728 4.12 1748 2476

584 3.03 0 584

Ennore

Expansion 1058 333 2.57 272 604 1049 124 2.66 279 403

Sub Total 13573 2143 3.71 5034 7177 9247 1723 2.61 2415 4138

Total - Own

Generating

Stations

41216 5081 2.97 12236 17317 26632 4293 2.12 5638 9931

Central

Generation

Stations

NTPC SR

(I&II) 4164 264 1.86 774 1038 3963 227 1.68 666 893

NTPC SR III 1074 107 2.19 235 342 991 92 2.00 198 290

NLC TS - I 1469 189 1.94 284 473 3478 292 2.24 779 1071

NLC TS - II 3450 240 2.27 783 1023 3196 177 1.98 633 809

NLC TS I

Expansion 1749 258 2.12 371 630 1474 194 1.80 265 460

NTPC Talcher 3567 345 2.39 853 1198 3370 278 1.41 475 753

NTPC

Simhadri 678 90 2.56 174 263 1560 271 1.99 311 582

MAPS 1986 0 2.33 462 462 1573 0 2.04 321 321

KAIGA 1278 0 3.65 467 467 1179 0 3.02 356 356

NTPC ER 0 53 0.00 0 53 0 0 0.00 0 0

NTPC Dadri 678 18 3.07 208 227 0 0 0.00 0 0

NTPC Vallur 7141 0 3.90 2785 2785 7112 1067 2.00 1422 2489

Kudankulam 5544 0 3.90 2162 2162 4388 0 3.02 1325 1325

PFBR

Kalpakkam 0 0 0.00

792 0 3.02 239 239

NLC TS - II

Expansion 1642 0 3.94 647 647 2220 333 2.00 444 777

NLC -

Tuticorin 1300 0 3.79 492 492 2651 398 2.00 530 928

Sub Total 35721 1564 2.99 10698 12261 37948 3329 2.10 7965 11294

IPPs

GMR 0 193 0.00 0 193 0 0 0.00 0 0

Samalpatti 0 141 0.00 0 141

100 10.18 0 100



June 2013

Source

Petition Commission

Units

(MU)

Capac

ity

Charg

es (Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energy

Charges

(Rs.

Crore)

Total

Cost

(Rs.

Crore)

Units

(MU)

Capacity

Charges

(Rs.

Crore)

Energy

Charge

s (Rs./

Unit )

Energ

y

Charg

es (Rs.

Crore)

Total

Cost

(Rs.

Crore)

PPN 0 347 0.00 0 347

292 8.55 0 292

Madurai 0 151 0.00 0 151

110 10.96 0 110

ST-CMS 1869 382 2.61 488 870 1665 364 2.32 385 749

ABAN 375 129 2.07 78 207 783 117 2.00 157 274

Penna 810 68 2.09 169 238 353 58 2.04 72 130

Sub Total 3054 1412 2.41 735 2147 2800 1042 2.19 614 1656

Renewable

Energy

Sources and

CPP

Captive 793

5.04 400 400

3.94 0 0

Wind 5866

3.77 2210 2210 7145

3.12 2229 2229

Biomass 881

5.49 484 484 11

4.45 5 5

Cogeneration 3126

4.50 1406 1406 1428

3.51 501 501

New

Cogeneration

Plants

0

0.00 0 0 805

4.00 322 322

Solar 769

5.47 421 421 16

4.62 7 7

Sub Total 11434

4.30 4920 4920 9405

3.26 3065 3065

Other Sources

Trading -

Bilateral &

Exchange

933

3.62 338 338 0 0 0.00 0 0

Jindal Power 0

0.00 0 0 1171 275 2.57 301 576

Adani Power 0

0.00 0 0

231 3.24 0 231

Lanco Power 0

0.00 0 0 878 215 2.43 214 429

UI 0

0.00 0 0 0 0 0.00 0 0

NTPC NVVN 694

4.60 319 319 35 0 4.45 16 16

Sub Total 1627

4.03 657 657 2085 721 2.54 530 1252

Total - Other

Power

Purchase

51836 2976 3.28 17009 19985 52238 5092 2.33 12174 17266

Transmission

Charges

PGCIL - ER &

SR 637

637

PGCIL -

Reactive

Energy

Charges

21

0

ABTPCIL

380

0

Sub Total

1038

637

Grand Total 93052 8057 3.14 29245 38340 78870 9385 2.26 17812 27834



June 2013

Aggregate Revenue Requirement for the second control period

4.225 Regulation 70 of the Tariff Regulations 2005 specifies the following:

“70. The Aggregate Revenue Requirement of Distribution licensee

The Aggregate Revenue Requirement of Distribution licensee consists of

thefollowing:-

(i) Cost of Power Purchase

(ii) Operation and Maintenance expenses

(iii) Depreciation

(iv) Interest and cost of finance

(v) Income Tax

(vi) Provision for Bad and Doubtful Debts

(vii) Provision for Insurance

(viii) Provision for contingency reserve

(ix) other expenses

(x) Return on equity / Reasonable rate of return”

4.226 Based on the approved expenses in the above sections of this Chapter, the Aggregate Revenue Requirement approved by the Commission for the second control period is

tabulated below:

Table 277: ARR approved by the Commission for the second control period (Rs. Cr.)


2013-14 2014-15 2015-16 2013-14 2014-15 2015-16

Expenses in respect of own

Generation 14324 15923 17317 9401 8851 9931

Power Purchase Cost 16442 19499 21023 14324 17949 17903

Annual Transmission

Charges payable to

TANTRANSCO

2329 2888 3629 1533 2850 3632

Operation and Maintenance

Expenses 4100 4582 5276 3779 4068 4396

Depreciation 328 388 530 362 435 519

Interest on Long term loan 2238 2376 2495 1525 1740 1938

Other Debits 30 36 38 20 26 28

Prior Period Expenses 0 0 0 0 0 0

Return on Equity 405 601 966 0 0 0

Interest on Working Capital 808 1237 1387 0 0 0

Contribution to

Contingency Reserves 75 89 122 0 0 0

ARR 41079 47618 52784 30945 35918 38347



June 2013

Non Tariff Income (NTI) and Other Income

4.227 The NTI has been approved by the Commission based on the same methodology as

done for FY 2012-13. The Commission has used the same year on year escalation rate

and based on its estimates for FY 2012-13, approved NTI for the second control

period.

4.228 TANGEDCO in its petition has filed Other Income for FY 2013-14 to FY 2015-16

separately for Generation and Distribution business. The Commission based on its

approach followed for the first control period has approved the Other Income as filed

by TANGEDCO for the said years. The non tariff income and other income approved

by the Commission for the distribution business is tabulated below.

Table 278: Non Tariff and Other Income approved by the Commission for the second control period (Rs.

Cr)

Particulars Petition Approved

2013-14 2014-15 2015-16 2013-14 2014-15 2015-16

Non Tariff Income 737.23 789.14 844.82 634.61 679.98 728.70

Other Income 303.47 341.00 363.54 303.47 341.00 363.54

Total 1040.70 1130.14 1208.36 938.08 1020.98 1092.24

Higher interest expenses due to abnormal Capitalization

4.229 In its Petition, TANGEDCO has proposed capital expenditure of around Rs. 16 Cr/MW – Rs. 18 Cr/MW for its new hydro stations.

Table 279: Capital expenditure for new hydro stations as per TANGEDCO MYT Petition (Rs. Cr)

Name of Power Plant Installed Capacity (in MW) Cost as on COD

Bhavani Barrage II 2 x 5 MW = 10 MW 187.61 Crores

Bhavani Kattalai

Barrage II

2 x 15 MW = 30 MW 497.46 Crores

Periyar Vaigai I 2 x 2 MW = 4 MW 62.00 Crores

Periyar Vaigai II 2 x 1.25 MW = 2.5 MW 48.29 Crores

4.230 In the revised capital expenditure and capitalization information submitted by

TANGEDCO, the capitalization of these hydro generating stations is shown around

Rs. 23Cr/MW to Rs. 33 Cr/MW. Commission is of the view that the proposed capital

cost is extremely high compared to industry norms. Inspite of repeated directions,

TANGEDCO has not filed any Petition for the approval of the capital cost of new

hydro stations. In view of this, Commission has disallowed the interest expenses on

higher capitalization considering the capital cost of Rs. 5.50 Crs/MW for small hydro

plants in accordance with CERC RE Tariff regulations. The disallowed capitalization

and interest expenses for the second control period are given below.



June 2013

Table 280: Capital cost as per revised filing and CERC norms

Power Plant Capitalization (Rs. Cr) Capacity

(MW)

Cost (Rs.

Cr /MW) CERC Norms

2013-14 2014-15 Total Cost – Rs.

Cr/MW

Cost – Rs.

Cr

Bhavani Barrage 307.18 22.34 329.52 10.00 32.95 5.50 55.00

Bhavani Katlai 837.02 7.59 844.61 30.00 28.15 5.50 165.00

Periyar 125.88 26.06 151.94 6.50 23.37 5.50 35.75

Table 281: Disallowed Capitalization and Capital Cost

Power Plant Disallowed Capital

Cost (Rs. Cr)

Disallowed Capitalization (Rs. Cr)

FY 2013-14 FY 2014-15

Bhavani Barrage 274.52 255.91 18.61

Bhavani Katlai 679.61 673.50 6.11

Periyar 116.19 96.26 19.93

Table 282: Disallowed Interest Expenses (Rs. Cr)

Power Plant FY 2013-14 FY 2014-15 FY 2014-15

Bhavani Barrage 15.33 31.78 32.89

Bhavani Katlai 40.35 81.07 81.43

Periyar 5.77 12.73 13.92

Total 61.45 125.57 128.25

Note: Interest expenses have been disallowed considering interest rate of 11.98%, estimated

based on average interest rate for FY 2010-11 and FY 2011-12

4.231 Based on the above submissions, the net ARR approved for the second control period

is tabulated below:

Table 283: Net Revenue Requirement approved by the Commission for the second control period (Rs.

Cr.)


2013-14 2014-15 2015-16 2013-14 2014-15 2015-16

Aggregate Revenue

requirement 41079 47618 52784 30945 35918 38347

Less: Other income and

NTI 1041 1130 1208 938 1021 1092

Less: Higher interest

expenses 0 0 0 61 126 128

Net Revenue

Requirement 40038 46488 51576 29946 34771 37127



June 2013

A5: ESTIMATION OF REVENUE GAP AND TARIFF

DETERMINATION FOR FY 2013-14

Revenue from Sale of Power –FY 2013-14

5.1 The following table details the revenue at existing and proposed tariff as revised and

filed by TANGEDCO for FY 2013-14 in its reply to data gaps.

Table 284: Revised filing of revenue at existing and proposed tariff for FY 2013-14

Particulars

Existing

Tariff

Proposed

Tariff

Rs. Crores Rs. Crores






III HT Commercial 1,387 1,387


V Others 338 338


Total HT 8,783 8,783



I-B Huts 105 220












Total LT 18,211 19,184

Total HT + LT 26,993 27,967

5.2 The Commission based on its revised estimation of sales, consumer load and number

of connections has calculated the revenue from sale of power based on the existing

and proposed tariff filed by TANGEDCO in its petition.



June 2013

5.3 TANGEDCO has proposed to revise the tariffs of LT I-B and LT IV categories. It is

pertinent to mention that the cost of entire consumption on account of huts as well as

on account of agricultural consumption is being borne by the Government of Tamil

Nadu by way of subsidy under Section 65 of the Electricity Act 2003. In this matter,

GoTN has given commitment letter No. 2369/A1/2013 dated 10th June 2013 detailing

provision of tariff subsidy to LT IB and LT IV categories of electricity consumers.

GoTN has also stated that the budget provision for necessary additional expenditure

has already been made in the budget for the year FY 2013-14 and a formal order of

GoTN in this regard will be issued shortly. Hence, the additional revenue from the

proposed tariff increase will be fully received as Government subsidy. The category-

wise revenue including subsidy approved by the Commission for FY 2013-14 is

tabulated below.

Table 285: Revenue from sales as approved by the Commission at existing and proposed tariff for FY

2013-14

Particulars

Existing

Tariff

Proposed

Tariff

Rs. Crores Rs. Crores






III HT Commercial 1,399 1,399


V Temporary supply 187 187

Total HT 9,052 9,052



I-B Huts 106 222












Total LT 17,962 18,926

Total HT + LT 27,014 27,978



June 2013

5.4 Therefore the Revenue from sale of power for FY 2013-14 approved by the

Commission is Rs. 27,014 Crores and Rs. 27,978 Crores at the existing and proposed

tariff. This revenue is inclusive of the Government subsidy component. Commission

envisages additional revenue of Rs. 964 Cr from the proposed tariff increase.

5.5 The Retail Tariff for various consumer categories as proposed by TANGEDCO and

approved by the Commission is as follows.

Table 286: Existing and Approved retail tariff schedule for FY 2013-14

Category

Slabs (Per

Month) Sub Category

Existing Tariff Approved Tariff

Energy

Charges

Rs./kWh

Demand

Charges/ Fixed

Charge

Energy

Charges

Rs./kWh

Demand

Charges/ Fixed

Charge

Low Tension

LT - IA Domestic

1-50 kWh 2.60 10 Rs per month 2.60 10 Rs per month


Above 100

kWh - Upto

250 kWh



Above 250

kWh



Above 250

kWh 5.75 20 Rs per month 5.75 20 Rs per month

LT - IB Huts

Single Slab

2.5

(On

Installati

on

of Energy

Meter)

60 Rs/kW per

month

4.3

(On

Installati

on

of

Energy

Meter) 125 Rs per month

LT - IC

LT bulk

supply

Single Slab 4.00 50 Rs per month 4.00 50 Rs per month

LT - IIA

Public

Lighting and

Water

Supply

Single Slab 5.50 0 Rs per month 5.50 0 Rs per month

LT - IIB

(1)

Govt.

Educational

Inst. etc.

Single Slab 5.00 50 Rs/kW per 5.00 50 Rs/kW per



June 2013

Category

Slabs (Per

Month) Sub Category


Energy

Charges

Rs./kWh

Demand

Charges/ Fixed

Charge

Energy

Charges

Rs./kWh

Demand

Charges/ Fixed

Charge

month month

LT - IIB

(2)

Pvt.

Educational

Inst. etc.

Single Slab 6.50

50 Rs/kW per

month 6.50

50 Rs/kW per

month

LT - IIC

Places of

Public

Worship

0-60 kWh 5.00

50 Rs/kW per

month 5.00

50 Rs/kW per

month

Above 60

kWh 5.00

50 Rs/kW per

month 5.00

50 Rs/kW per

month

LT -

IIIA (1)

Cottage and

Tiny

Industries

0-250 kWh 3.50

15 Rs/kW per

month 3.50

15 Rs/kW per

month

Above 250

kWh 4.00

15 Rs/kW per

month 4.00

15 Rs/kW per

month

LT -

IIIA (2)

Power

Looms

0-250 kWh 4.50

50 Rs/kW per

month 4.50

50 Rs/kW per

month

Above 250

kWh 5.00

50 Rs/kW per

month 5.00

50 Rs/kW per

month

LT -

IIIB

L.T.

Industries

Single Slab 5.50

30 Rs/kW per

month 5.50

30 Rs/kW per

month

LT - IV

L.T.

Agriculture

Single Slab

1.3

(On

Installati

on

of Energy

Meter)

1750

Rs/HP/Annum

2.8

(On

Installati

on

of

Energy

Meter)

2500

Rs/HP/Annum

LT - V

L.T.

Commercial

0-50 kWh 4.30

60 Rs/kW per

month 4.30

60 Rs/kW per

month

All Units 7.00 60 Rs/kW per 7.00 60 Rs/kW per



June 2013

Category

Slabs (Per

Month) Sub Category


Energy

Charges

Rs./kWh

Demand

Charges/ Fixed

Charge

Energy

Charges

Rs./kWh

Demand

Charges/ Fixed

Charge

month month

LT - VI

Temporary

supply

Single Slab 10.50 100 Rs/kW/Day* 10.50

300 Rs/kW per

month

High Tension

HT - IA

HT

Industries

Single Slab 5.50

300 Rs/kVA per

month 5.50

300 Rs/kVA per

month

HT - IB

Railway

Traction

Single Slab 5.50

250 Rs/kVA per

month 5.50

250 Rs/kVA per

month

HT - IIA

Govt.

Educational

Inst. etc.

Single Slab 4.50

300 Rs/kVA per

month 4.50

300 Rs/kVA per

month

HT - IIB

Pvt.

Educational

Inst. etc.

Single Slab 5.50

300 Rs/kVA per

month 5.50

300 Rs/kVA per

month

HT - III

HT

Commercial

Single Slab 7.00

300 Rs/kVA per

month 7.00

300 Rs/kVA per

month

HT - IV

Lift

Irrigation

Societies

Single Slab 3.50

0 Rs/kVA per

month 3.50

0 Rs/kVA per

month

HT - V

Temporary

supply

Single Slab 9.50

300 Rs/kVA per

month 9.50

300 Rs/kVA per

month

*Minimum Charges



June 2013

Revenue gap and determination of Regulatory Asset

5.6 TANGEDCO in its Petition has projected revenue gap to be recovered based on,

• Final true-up for FY 11

• Provisional true-up for FY 12

• Annual Performance Review for FY 13

• Aggregate Revenue Requirement for FY 14

Table 287: Consolidated Revenue Gap calculated by TANGEDCO (Rs. Crores)

Particulars Petition

2010-11 2011-12 2012-13 2013-14

Aggregate Revenue Requirement 13,415 34,431 36,247 41,079

Less : Non Tariff Income 217 644 689 737

Less : Other Income 93 141 132 303

Less : Other Income from Generation 0 2 0 0

Aggregate Revenue Requirement 13,105 33,645 35,426 40,039

Total Revenue including Subsidy 7,332 18763 25,707 29,695

Revenue Gap at Existing Tariff 5,773 14,882 9,719 10,344

Table 288: Additional revenue gap arrived by TANGEDCO in its petition (Rs. Crores)

Year Gap Approved

by Commission last year

Gap Arrived in

this Petition

2010-11 4,187 5,773

2011-12 13,409 14,882

2012-13 -6 9,719

2013-14 0 10,344

Total 17,590 40,718

5.7 TANGEDCO has submitted a total revenue gap of Rs. 40,718 Cr upto FY 2013-14 in

its petition for the post unbundling period.

5.8 Commission has arrived at the revised revenue gap considering the approved net

revenue requirement and revenue at existing tariffs from FY 2010-11 to FY 2013-14.

For FY 2013-14, Commission has arrived at the revised revenue gap after considering

the additional revenue estimated to accrue to TANGEDCO through tariff hike. The

revenue gap determined by the Commission from FY 2010-11 to FY 2013-14 is

tabulated below.



June 2013

Table 289: Revenue Gap re-estimated by the Commission for the period FY 2010-11 to FY 2013-14 (Rs.

Cr)

Particulars 2010-11 2011-12 2012-13 2013-14 Total

Net Revenue Requirement 11898 28953 30472 29946 101269

Less: Revenue from Sale of

Power at Existing Tariff

including Tariff Subsidy

7848 19475 23561 27014 77898

Revenue Gap at existing

tariff 4050 9478 6911 2932 23371

Less: Additional revenue

through tariff increase 964 964

Revenue Gap at revised

tariff 1,968 22407

Revenue Account and Amortization of Regulatory Asset

5.9 TANGEDCO in its petition has revised its total outstanding Regulatory Asset based

on the total gap arrived in its petition, which is cumulative of gap for FY 2010-11

(true-up for 5 months), FY 2011-12 (on provisional true-up), FY 2012-13 (Estimated

for current year) and FY 2013-14 (gap for ensuing year), It has submitted that the

revised calculation of Regulatory Assets may kindly be approved.

5.10 It is also to be noted that the current tariff hike as estimated by TANGEDCO will

result in additional revenue to the tune of Rs 973 Crores, which would be met through

Government subsidy.

Table 290: Regulatory Assets as claimed by TANGEDCO

Particulars Rs. Crores

Loss for the year

FY 2010-11 5,773

FY 2011-12 14,882

FY 2012-13 9,719

FY 2013-14 10,344

Total Gap arrived in this Petition 40,718

Total Regulatory Asset approved by Commission 19,571

Less : Tariff hike proposed 973

Additional Regulatory Asset Proposed 20,173

Total Regulatory Asset Proposed 39,744

5.11 In the last order Commission has directed TANGEDCO not to mix up the capital

accounts and revenue accounts. Hence, Commission in line with its direction is

treating the revenue account separately. Commission has arrived at the consolidated

revenue gap of Rs. 23677 Cr as on March 2013 by considering the approved revenue

gap for each year of the first control period in this order and allowing interest

expenses at 11%. The consolidated revenue gap arrived at closing of FY 2013 is given

below.



June 2013

Table 291: Revenue account for the first control period (Rs. Cr)


Opening 0 4145 14657

Additions (Revenue gap approved

by the Commission) 4050 9478 6912

Add: Interest Expenses 95 1034 2108

Closing 4145 14657 23677

Average 2073 9401 19167

5.12 Considering the approved revenue gap of Rs. 1967 Crs for FY 2013-14, Commission

has arrived at the net regulatory asset of Rs. 25644 Crs for FY 2013-14.

Table 292: Regulatory Asset arrived by the Commission (Rs. Cr)

Parameter Amount (Rs. Cr.)

Revenue Gap - Ending March 2013 23677

Revenue Gap - FY 2013-14 1967

Regulatory Asset 25644

5.13 In the Tariff Order No. 1 dated 30th March 2012, the proposed methodology for

Amortization of the Regulatory Asset had been laid down as follows.

“Para 9.8.2: The Regulatory Asset is proposed to be amortized over a period of 5

years commencing from the year 2013-14 onwards. Once the Regulatory Asset is

arrived at, 1/5th of the Regulatory Asset would be amortized along with the carrying

cost. When the tariff order for 2014 – 15 is done, the Regulatory Asset would be re-

worked out and 1/4th of such Regulatory Asset would be amortized in that tariff order

along with that cost and so on until the entire Regulatory Asset is amortized. The

carrying cost would correspond to the weighted average rate of interest for medium

/long term loans of TANGEDCO in the corresponding year in which the amortization

of the Regulatory Asset is done. The amortization is in-principle approved to be met

by Government of Tamil Nadu as per their letter (Ms.) No. 32 dated 25-03-2012 as

enclosed in Annexure IX. The Commission is of the view that creation of Regulatory

Asset could not be avoided in view of the accumulation of Regulatory Asset over a

period due to phenomenal load growth, less addition to the generating capacity, high

power purchase costs, increase in costs and non filing of tariff petition.”

5.14 The Regulatory Asset determined in Table 292 shall be taken into consideration while

amortization the outstanding regulatory asset for this year.

5.15 In response to TANGEDCO’s letter on amortization of regulatory asset, GoTN has

agreed for amortization of regulatory asset through Letter(Ms.) No. 59/C2/2012 dated

7th June 2013. The relevant extracts of the letter received from GoTN are reproduced

below:

a) GoTN has agreed to the financial restructuring of the state Discoms

announced by GoI on 5th October 2012. Accordingly, GoTN will take over

50% of TANGEDCOs short term liabilities to the tune of Rs. 6382.68 Crs in a

phased manner.



June 2013

b) In GoTN annual budget for FY 2013-14, Rs. 3000 Cr has been provided for the takeover during the current financial year. The remaining liabilities would

continue to be in books of TANGEDCO till the time of eventual takeover.

However, the interest on these liabilities will be paid by the GoTN.

c) Keeping in view, the financial restructuring plan and available audited accounts GoTN has proposed following approach for amortization of

Regulatory Asset.

i. As the audited accounts are available only for the year FY 2010-11, the

amortization may be carried out for the regulatory assets of the year for

which audited accounts are available. For subsequent years, the

regulatory assets would be reassessed for amortization as soon as

audited accounts are available.

ii. The carrying cost of the Regulatory Assets can be linked to the actual

cost of cash loss financing after the financial restructuring. At present

it is 11%. Hence, the same interest rate may be taken as carrying cost.

iii. Since the GoTN is already taking over Rs. 6382.68 Cr of short term

liabilities of TANGEDCO, part of this amount may be accounted for

amortization to the extent of 1/5th of the regulatory assets as per the

audited accounts of FY 2010-11

iv. The balance amount can be adjusted towards amortization of the

regulatory assets in subsequent years.

v. Since the GoTN is also paying interest on the balance amount, the

carrying cost of such amount can be discounted in arriving at the

regulatory assets in subsequent years.

vi. The GoTN has in-principle agreed to amortisation of Regulatory

Assets. The details are to be worked out in conjunction with tariff

revision.

5.16 Commission considering the letter received from GoTN has estimated the Regulatory

Asset pertaining to FY 2010-11 at a carrying cost of 11%. Commission has then

amortized 1/5 of the estimated Regulatory Asset pertaining to FY 2010-11.

Table 293: Regulatory Asset amortized during FY 2013-14 (Rs. Cr)


Opening 0 4145 4628

Additions 4050 0 0

Interest Expenses 95 482 539

Closing 4145 4628 5166

Regulatory Asset to be Amortized

(1/5 of the RA as on March 2013) 1033



June 2013

5.17 Commission approves Regulatory Asset of Rs. 24611 Crs after the considering the

amortized regulatory asset.

Table 294: Regulatory Asset approved by the Commission (Rs. Cr)

Parameter Amount (Rs. Cr.)

Regulatory Asset (Initial Estimate) 25644

Amortized Regulatory Asset 1033

Revised Regulatory Asset 24611

5.18 It is pertinent to mention that Commission still have an approval of GoTN for

amortization of Rs. 5350 Crs, which will be adjusted towards amortization in the

subsequent years. In addition, Commission will not consider interest expenses on this

amount while calculating the regulatory asset for subsequent years.

5.19 In this order Commission has increased tariff only for two cagetories i.e Agriculture

and Huts. With new capacities getting added this year after considerable delay,

Commission expects the average power purchase cost to reduce with increase in

regulated power purchase besides improving the power supply position. Further in FY

2012-13 tariffs were increased to all LT consumers by a big margin. Also, GoTN has

in principle agreed for amortisation of Regulatory Asset in conjunction with tariff

revision.

“Point 4(f) of Letter (Ms) No. 59/C2/2012 dated 7th June 2013

The Government in its letter cited first above has agreed in-principle with a request of

amortisation of regulatory assets. The details are to be worked out in conjuction with

tariff revision.”

5.20 Based on above submissions, Commission is of the view that tariffs can be reviewed

later along with the amortisation of balance regulatory asset. Also, TANGEDCO is in

the process of finalization of its Financial Restructuring Plan (FRP) scheme and once

the scheme is finalized, the amortization of balance regulatory asset can be worked

out considering GoTN support, FRP scheme etc.

5.21 Commission wants to reiterate its view regarding opening loans allocated to

TANGEDCO through provisional transfer scheme. TANGEDCO is borrowing new

loans for repayment the loans allocated and these borrowings can only be reduced by:

a) Additional cash infusion into the business

b) Revision of transfer scheme through which the opening loans

allocated to TANGEDCO gets reduced.

These issued need to be kept in view by TANGEDCO and GoTN while

finalizing the Transfer Scheme and the opening balance sheet as on 1st

November 2010.



June 2013

Voltage wise Cost to Serve, Average Cost of Supply and Cross subsidy

reduction

Voltage wise cost to serve for FY 2013-14

5.22 Pursuant to the directives of the Hon’ble Appellate Tribunal in its judgement dated

28.7.2011 in Appeal no. 192 & 206 of 2010 in which the Tariff Order dated 31.7.2010

was challenged, the Commission had estimated the voltage wise cost to serve in its

tariff order dated 30.3.2012, but had not determined the cross subsidy based on it.

5.23 The Commission has also very clearly stated its views in the same order as its

response to stakeholder comments in Para 2.1.461:

“………..

i. The cross subsidy for a consumer category is the difference between cost to serve

that category of consumers and average tariff realization of that category of

consumers. While the cross-subsidies have to be reduced progressively and

gradually to avoid tariff shock to the subsidized categories, the cross-subsidies

may not be eliminated.

ii. The tariff for different categories of consumer may progressively reflect the cost of

electricity to the consumer category but may not be a mirror image of cost to

supply to the respective consumer categories.

iii. Tariff for consumers below the poverty line will be at least 50% of the average cost

of supply.

iv. The tariffs should be within ±20% of the average cost of supply by the end of 2010-

11 to achieve the objective that the tariff progressively reflects the cost of supply of

electricity.

v. The cross subsidies may gradually be reduced but should not be increased for a

category of subsidizing consumer.

vi. The tariffs can be differentiated according to the consumer’s load factor, power

factor, voltage, total consumption of electricity during specified period or the time

or the geographical location, the nature of supply and the purpose for which

electricity is required.

vii. Thus, if the cross subsidy calculated on the basis of cost of supply to the consumer

category is not increased but reduced gradually, the tariff of consumer categories

is within ±20% of the average cost of supply except the consumers below the

poverty line, tariffs of different categories of consumers are differentiated only

according to the factors given in Section 62(3) and there is no tariff shock to any

category of consumer, no prejudice would have been caused to any category of

consumers with regard to the issues of cross subsidy and cost of supply raised in

this appeal.”



June 2013

5.24 Further the Commission in line with the directives of the Hon’ble Appellate Tribunal

had also directed TANGEDCO to undertake data collection for computing accurate

cost of supply and submit a study report computing the consumer category wise and

voltage wise cost to serve. TANGEDCO in partial compliance to the above directive

has undertaken a technical study and computed the category wise cost of service but

has stated its inability to compute voltage wise cost to serve as its accounting system

are not robust enough to capture cost details voltage wise.

5.25 Consequently in the Order of Hon’ble Appellate Tribunal of Electricity dated 9th April

2013 in Appeal Nos. 257 of 2012 in which the the Commissions tariff order dated

30.3.2012 was challenged, the Appellate Tribunal’s opinion on this issue of cross

subsidy reduction is extracted below:

“13. The fifth issue is regarding increase in cross subsidy.

13.1 According to the Appellant the cross subsidy for HT consumers has been

increased from 17% to 47% and the State Commission has also failed to

comply with the directions given by the Tribunal regarding determination of

voltage wise cost of supply in Appeal no. 192 of 2010.

13.2 According to learned counsel for the State Commission, the cross subsidy with

respect to average cost of supply for Industries was 122% for the FY 2010-11

as per the tariff order dated 31.7.2010 which has been increased to 147% in

the impugned order. However, the Tariff Order dated 31.7.2010 for FY 2010-

11 was not a matching Tariff Order in which large gap was left between the

revenue requirement and ARR allowed whereas the impugned order was

issued for the entire ARR without leaving any revenue gap. However, in the

impugned order while the tariff of Appellant was increased by 19%, the

increase in tariff to some of the subsidized categories was Domestic 42%,

Huts 400%, Power looms 130% and Agriculture 589%. Further increase to

subsidized categories would give great tariff shock to these categories. The

contribution of major LT consumers towards cost was also raised from 54% to

80%. Further, the voltage wise cost of supply could not be determined as the

distribution licensee could not supply the requisite data. The essential

requirement laid down in Section 61(g) of the Act in regard to tariff being

progressively reflecting the cost of supply and also reduction in cross subsidy

could be verified only from the next tariff order of the State Commission.

13.3 We notice that the first tariff order was given by the State Commission on

15.3.2003. Thereafter, the tariff was determined only by order dated 31.7.2010

for FY 2010-11 after a lapse of seven years. During these seven years, the

accumulated losses of the distribution licensee increased manifold. However,

the State Commission did not allow recovery of the accumulated losses of the

previous years in the tariff and decided that the financial losses of the

previous years would have to be addressed by restructuring with intervention

of the State Government. The State Commission decided to leave revenue gap

and create regulatory assets in the anticipated revenue during the control

period 2010-11 to 2012-13. For the years 2010-11 and 2011-12, the State

Commission had left revenue gap of Rs. 7904.04 crores and Rs. 6062.24



June 2013

crores respectively. Thus, the tariff for FY 2010-11 was fixed after leaving

huge revenue gap which was uncovered by tariff even though the tariff was

determined after a lapse of seven years.

13.4 Let us now examine the directions of the Tribunal in judgment dated 28.7.2011

in Appeal no. 192 of 2010 in which the tariff order dated 31.7.2010 was

challenged.

"13.4. The fourth issue is regarding cost to serve each category of consumer.

We have noticed that the State Commission has not determined the cost of

supply according to its Regulations as also the variation in tariff of different

categories of consumers with reference to average cost of supply. In the

absence of this information, we are not able to verify that the tariff of

categories of consumers is within ± 20% of the average cost of supply and

whether the cross subsidy has been reduced or increased with respect to the

previous year. The issue regarding cost of supply has been dealt with in this

Tribunal's Judgment dated 30th May, 2011 in Appeal Nos. 102, 103 and 112

of 2010 in the matter of Tata Steel Limited vs. Orissa Electricity Regulatory

Commission, etc. Accordingly, the State Commission is directed to determine

the voltage wise cost of supply within six months from the date of this

Judgment to ensure that in the future tariff orders cross subsidies for different

categories of consumers are determined according to the Regulations and the

cross subsidies are reduced as per the provisions of the Act. The State

Commission is also directed to determine the variation of tariff of different

categories of consumers with respect to average cost of supply and provide

consequential relief, if any, to the appellant's consumer category in terms

with our findings after hearing all concerned."

13.5 We notice that that State Commission has estimated the voltage wise cost to

serve in the impugned order but has not determined the cross subsidy with

respect to voltage wise cost to serve and has directed the distribution licensee

to carry out some data collection exercise for computing accurate cost of

supply and submit a study report on computation of consumer category wise

and voltage wise cost to serve.

13.6 It is noticed that the State Commission has increased the tariff of the

subsidized categories considerably. The increase in the tariff of various

subsidized categories as given in Table 227 of the impugned order is as under:

LT Domestic 40%

Hut 755%

Power Looms 143%

LT Agriculture 593%



June 2013

LT Total 48%

Thus, we agree with the contention of the State Commission that the State

Commission has increased the tariff of the subsidized categories considerably

and further increase would have caused greater tariff shock to these

categories.

13.7 We find that if the tariff of Appellant's category is kept within plus 20% of the

average cost of supply it may require increase in tariff of subsidized LT

consumers by 110% of the pre-revised tariff causing greater tariff shock to

them. This would be evident by following:

i)Consumption of industries category IA 13545 MU

ii)Revenue at the revised tariff of Rs. 7.32 per kWh 9914 crores

iii)Tariff at + 20% of average cost of supply (Rs.4.99 per kWh) Rs. 6 per kWh

iv)Revenue at Rs. 6 per kWh 8127 crores

v)Loss of revenue from industries category IA 1787 crores

vi)Consumption of LT subsidized consumers 29709 MU

vii)Increase in average tariff to recover loss of revenue from industrial category

IA

(v)

( ______x 10)

(vi)

Rs. 0.60 per

kWh

viii)Average tariff of subsidized LT consumers after tariff increase Rs. 2.86

ix)Increased average tariff required to cover the loss of revenue Rs.3.46 per

kWh

x)Average tariff of subsidized LT consumers prior to revision Rs.1.65 per

kWh

xi)Desired average increase in LT tariff to cover loss of revenue %age About 110%

xii)Average increase allowed to LT subsidized category About 73%

Thus, against present average increase of about 73% allowed to the

subsidized LT categories, the increase required to bring the HT, IA category

alone to + 20% of average cost of supply would be about 110%. If other

subsidizing consumers had to be brought within +20% or average cost of

supply, the required increase in tariff in the subsidized categories would have

been much higher.

13.9 Let us now examine the findings of the State Commission in the impugned order



June 2013

"9.7.2 The Commission notes that the present level of cross subsidisation of

LT category consumers has been brought down from 46% to 20%, which is a

huge shift towards the final goal of +20% of Average Cost of Supply.

9.7.3 Retail Tariff in State of Tamil Nadu was not revised for a period from

FY 2003-04 to FY 2009-10, on account of non filing of the tariff petition by

erstwhile TNEB. Increase in average cost of supply has been sought by

TANGEDCO, in this Tariff Petition. Cross-subsidy has been in existence

historically even in the period where there was no tariff revision. The

Commission also observes that tariff that was charged to most of the

categories of consumers was below average cost of supply. Hence, now when

the TANGEDCO has sought actual pass through of revenue gap in the form

of Tariff Increase and Regulatory Asset, the impact on each category of

consumers is significant. The Commission has attempted to reduce the cross-

subsidy between the consumer categories in this Order, by rationalising the

tariff for subsidised categories and suitably adjusting the tariff for

subsidising categories, vis-à-vis the prevailing average cost of supply, while

at the same time, trying to ensure that there is no tariff shock to any

consumer category. However, since the average cost of supply has been

increasing steadily, the average tariff increase required to meet the revenue

gap is also increasing, and hence, the subsidising consumers have not been

able to experience tariff reduction in absolute terms.”

13.10 In the circumstances of the case, we feel that the State commission has tried to

increase the tariff of the subsidized categories substantially so as to reduce the

component of cross subsidy. The comparison of charge in cross subsidy with

the previous tariff order for FY 2010-11 may not give correct picture as in the

previous tariff order the tariffs were not increased adequately to meet the

revenue gap and a huge revenue gap was left uncovered. The State

Commission has already increased the tariff of subsidized categories

substantially and further increase would have caused greater tariff shock to

them which may not be desirable.

13.11 Accordingly, we are not inclined to interfere in the tariff determined by the

State Commission. However, the State Commission is directed to determine

the voltage-wise cost of supply and corresponding cross subsidy for each

category of consumer in the future tariff order.”



June 2013

5.26 The Commission has noted that sufficient data is not available for metering and

segregation of the network costs for determination of cost of supply for different

categories of consumers. To undertake an accurate and logically sound voltage wise

cost of supply study, TANGEDCO should select sample feeders/ consumers for load

research study. The selected sample should be statistically verified to be

representative of the population. Hourly load data and energy consumption should be

collected from selected feeders/ consumers for each voltage category of consumers.

From the data so collected TANGEDCO should undertake a load research study to

determine the contribution to Coincident Factor and Class Load Factor for each

voltage category. Further TANGEDCO should have accurately classified voltage wise

losses, voltage wise number of consumers and their load. Based on such a study a

representative cost to serve various voltage classes can be arrived at. TANGEDCO

has so far not conducted such a study and gathered the required information.

5.27 The Commission would also like to note that the year FY2012-13 has seen severe

shortage of power due to which more stringent R&C measures as well as load

shedding was unavoidable. Given such a situation where cyclical load shedding was

adopted, the voltage wise consumer contribution to peak would have been misleading.

Considering the peculiar difficulties in this specific situation as well as the fact that

sufficient data is unavailable, the Commission has resorted to estimate the voltage

wise cost to serve based on the data made available.

Embedded cost method

5.28 The annual revenue requirement has been allocated to consumers connected at

different voltage levels based on a combination of allocation factors. The factors are:

contribution of a voltage class to the power purchase, voltage wise cost contribution

to network assets, contribution of a voltage class to T&D losses, number of

consumers in a voltage class and connected load of consumers in a voltage class.

5.29 The Commission has calculated the voltage wise cost to serve using three steps

namely functionalisation, classification and allocation of costs to various voltage

classes.

A. Functionalisation:

5.30 Firstly the total costs have been segregated according to the major operating functions

of the utility, such as generation, transmission or distribution.

Table 295: Functionalisation of costs of TANGEDCO for FY 14 (Crs)

Sl. No Cost Heads Generation Transmission Distribution

1 Power Purchase Cost 23,726

2 Transmission Cost 1,533

3 Distribution Cost

Employees costs 3,610

Repair & Maintenance 68

Administration & General expenses

101

Depreciation

362



June 2013

Sl. No Cost Heads Generation Transmission Distribution

Interest on Long term loan* 1,464

Other Debits & extra ordinary items 20

Prior Period Debit/(Credit) Charges

-

Reasonable Return / Return on Equity

-

Interest on Working Capital -

Contribution to Contingency Reserves -

Total expenditure 5,625

Less Other Income and Non tariff income 938

Total Distribution cost 4,687

*After deducting the interest expenses disallowed for new hydro stations

B. Classification of costs:

5.31 The objective of cost classification is to arrange costs into groups that bear a

relationship to a measurable cost-defining characteristic of the service being rendered.

Functionalized costs are classified as:

• Demand related

• Energy related and

• Customer related

5.32 The Demand classification relates to costs expended for providing capacity to serve

system load requirements. The Energy related classification consists of those

expenses that vary with any change in the consumption, such as energy component of

power purchase cost. The Customer related classification is related to expenses linked

directly to and varies by the number and type of customers served.

a. Classification of Generation Expenses:

Power is procured from both own generating stations of TANGEDCO as well as

purchased from various allocated CGS stations, IPPs, NCES and Other short term

sources.

The power procurement cost has both fixed and variable component and hence

ideally the total fixed cost of own generation and power purchase should be

classified as demand related and the total variable cost of own generation and

power purchase as energy related costs.



June 2013

The Commission observes that the Power purchase costs are identified as both

demand and energy related as TANGEDCO should not only be able to supply

adequate energy for sale to consumers but also have sufficient installed capacity

or purchase capacity to satisfy the system peak demand. For this segregation

TANGEDCO would have to provide information pertaining to contribution of

individual class to coincidental peak demand. It has been observed from the

Technical Paper on Cost to Serve submitted by TANGEDCO that the above

information is not available with them. Thus the Commission has treated the

entire own generation as well as power purchase cost as energy related costs, so as

to have a logical basis for apportioning the cost as an approximation. As and when

the required details become available calculations will have to be made by

dividing the power procurement costs with demand related and energy related

costs.

b. Classification of Transmission Expenses:

Usually the entire transmission costs are classified as demand related. However, a

minor portion of transmission investment is utilised for reducing the energy losses

in the transmission system. Hence 2% of transmission charges are classified as

energy related costs and 98% as demand related.

c. Classification of Distribution Expenses:

A large quantum of the distribution costs are related to the creation and

maintenance of the network. This cost is classified as being demand related. The

Distribution utility also incurs expenses to provide service to customers and is also

required to meet customer peak demand requirements. This component of expense

varies with the number of customers to be served, like providing connections to

new consumers which in turn also adds to the utilities system capacity to meet

peak demand. Thus they exhibit attributes of both demand and customer charges

and have been apportioned thus.

Table 296: Classification of functional costs

Cost Heads Demand Energy Customer Total

Power Purchase Cost 0% 100% 0% 100%

Transmission Cost 98% 2% 0% 100%

Employees costs 60% 0% 40% 100%

Repair & Maintenance 50% 5% 45% 100%

Administration & General expenses 75% 5% 20% 100%

Depreciation 95% 5% 0% 100%

Interest on Long term loan 95% 5% 0% 100%

Other Debits & extra ordinary items 95% 5% 0% 100%

Prior Period Debit/(Credit) Charges 95% 5% 0% 100%

Reasonable Return / Return on Equity 95% 5% 0% 100%

Interest on Working Capital 95% 5% 0% 100%

Contribution to Contingency Reserves 95% 5% 0% 100%

Less Other Income and Non tariff income 95% 5% 0% 100%



June 2013

C. Allocation of costs:

5.33 The last step is the process of apportioning the classified costs to each voltage class

on the basis of an appropriate methodology apt for that class of cost. The Commission

has used the following apportioning methodology for the three heads of cost.

a. Demand cost allocation

5.34 Transmission and Distribution demand cost – The costs incurred under these heads

have been allocated by the Commission to voltage classes based on the proportion of

network assets utilised to serve the consumers at specific voltages. These ratios have

been arrived at by first arriving at the total value of voltage wise assets at the end of

FY2012-13 as follows.

5.35 The Commission has based its estimations, on the voltage wise per unit cost and asset

quantum and has arrived at the proportion of asset at each voltage level as follows.

Table 297: Total Line cost as at end of FY 2012-13

Voltage Total cost proportion

>230 kV 17%

110 kV 23%

33 kV 4%

22 kV 5%

11 kV 12%

LT 38%

Total 100%

5.36 On arriving at this preliminary voltage wise cost proportion, a further reclassification

of the same has been done based on the voltage wise sales and wheeled energy

grossed up for losses. This has been done in light of the fact that the higher voltage

systems act as the backbone network for lower voltage systems and hence its full cost

cannot be allocated only to the voltage class it pertains to but also to lower voltage

systems in the proportion of its utilisation i.e. energy requirement at the specific

voltage periphery.

5.37 Explaining further, the reclassification ratios as applied by the Commission are as

follows. The proportion of energy requirement at a particular voltage to total energy

requirement has been calculated and progressively the same logic has been extended

to arrive at the proportion by limiting total requirement upto a lower voltage level.

These ratios are then used to allocate the voltage wise costs arrived at each voltage

level to all lower voltages also.



June 2013

Table 298: Reclassification ratios based on voltage wise energy requirement

Voltage

Energy at

Voltage

Periphery

(MU)*

Total

sales

Upto 110

kV

Upto 33

KV

Upto 22

kV

Upto 11

kV

Only LT

kV

>230

KV 1,044 1.4%

110 KV 4,770 6.2% 6.3%

33 KV 2,145 2.8% 2.8% 3.0%

22 KV 4,116 5.3% 5.4% 5.8% 7.2%

11 KV 11,849 15.3% 15.6% 16.6% 0.0% 18.2%

LT 53,311 69.0% 70.0% 74.6% 92.8% 81.8% 100%

Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

*Wheeling units at different voltages have been arrived by certain assumptions

Table 299: Voltage wise demand cost allocation factor

Voltage Total cost proportion Reclassification proportion

>230 kV 17% 0.2%

110 kV 23% 2.5%

33 kV 4% 1.3%

22 kV 5% 2.8%

11 kV 12% 9.2%

LT 38% 84.1%

Total 100% 100.0%

b. Energy cost allocation

5.38 Total energy cost – The total cost classified by the Commission as energy related

costs are allocated in the ratio of energy requirement for consumers of a specific

voltage class. The energy requirement includes voltage wise sales and voltage level

losses.

Voltage wise Energy Related Cost = Total Energy Cost x (Voltage wise Sales +

Voltage wise Energy Losses) / Total energy

requirement at transmission periphery

5.39 The power purchase at transmission periphery has been arrived at considering a total

loss of 16.4%. The table below captures the sales, losses and energy requirement for

each voltage class.

5.40 The Commission has based its estimations, on the energy balance data and voltage

wise losses data furnished by TANGEDCO.



June 2013

Table 300: Voltage wise energy cost allocation factor

Sl. No Voltage

Energy

cost

allocation

factor

1 >230 kV 1.1%

2 110 kV 4.8%

4 33 kV 1.6%

5 22 kV 3.1%

6 11 kV 8.9%

7 LT 80.6%

Total 100.0%

c. Customer cost allocation

5.41 Total customer related cost - The costs incurred under this head have been allocated

by the Commission to voltage classes based on the number of consumers in each

voltage class. However, the number of consumers in each class has been weighted to

reflect the appropriate cost causation aspects of the voltage class. The weights are a

function of two parameters namely sales per consumer and load per consumer.

5.42 Allocation of customer related costs are illustrated below in which sales per consumer

and load per consumer has been taken on a weight scale of 1-200 to enable a

meaningful comparison.

Table 301: Voltage wise customer cost allocation factor

Scale 1 200

Voltage

Connecte

d Load

No. of

Consumers Sales

Sales

weightage

Load

weightage

Average

weightage

Total

weight Customer

cost

allocation

factor MW No. MU

Sales Per

Consumer

Load Per

Consumer AW AW*No.

>230kV 429 12 721 200 200 200 2,355 0.01%

110 kV 1,586 183 3,067 200 200 200 36,614 0.14%

33kV 1,036 185 1,027 200 200 200 37,042 0.14%

22kV 1,959 1,829 1,917 200 200 200 365,708 1.37%

11kV 5,433 6,097 5,514 200 200 200 1,219,382 4.58%

LT 51,628 24,952,457 44,953 1 1 1 24,952,457 93.76%

Total 62,071 24,960,762 57,199

26,613,557 100.00%

Voltage wise cost to serve

5.43 Based on the above allocation factors the Commission has allocated the entire ARR to

each voltage class. The sum of the allocated voltage wise demand cost, energy cost

and consumer cost will result in the total cost allocated to each voltage class. Based

on the sales to each voltage class the Commission has arrived at the voltage wise cost

to serve as follows.



June 2013

Table 302: Voltage wise total cost allocation

Voltage

level

Demand

cost

Crores

Demand cost

allocation

factor

Energy

cost

Crores

Energy cost

allocation

factor

Customer

cost

Crores

Customer

cost allocation

factor

Total

cost

Crores

>230 kV 11 0.2% 262 1.1% 0 0.01% 272

110 kV 116 2.5% 1,134 4.8% 2 0.14% 1,252

33 kV 58 1.3% 382 1.6% 2 0.14% 443

22 kV 128 2.8% 734 3.1% 21 1.37% 883

11 kV 425 9.2% 2,113 8.9% 68 4.58% 2,606

LT 3,904 84.1% 19,185 80.6% 1,401 93.76% 24,490

Total

Cost 4,641 23,810 1,495 29,946

Table 303: Voltage wise Cost to Serve

Voltage level

Demand

related cost

(Rs./ kWh)

Energy related

cost

(Rs./ kWh)

Customer

related cost

(Rs./ kWh)

Cost of

supply per

unit

(Rs/kWh)

>230 KV 0.15 3.63 0.00 3.78

110 KV 0.38 3.70 0.01 4.08

33 KV 0.57 3.72 0.02 4.31

22 KV 0.67 3.83 0.11 4.60

11 KV 0.77 3.83 0.12 4.73

LT 0.87 4.27 0.31 5.45

Total 0.81 4.16 0.26 5.24

5.44 It is clear that the cost to serve lower voltage classes is higher than the cost to serve

higher voltage classes primarily due to higher losses, both technical and commercial,

larger consumer base and consumer load.

5.45 The Commission would like to continue to take the stance as taken last year

recognising the importance of carrying out such an exercise in detail enables itself to

test the retail tariff. As mentioned earlier, for arriving at realistic and accurate costs an

extensive data collection exercise has to be carried out by TANGEDCO which will

include a 12-month load profile study of each voltage wise consumer category.

Gathering of load data will require appropriate statistical selection procedure so that

the data is representative of the population at large. It will be imperative to first

determine the criteria for selection of sample data to arrive at close to accurate costs.

5.46 Even though TANGEDCO has attempted to calculate cost to serve, it has been

unsuccessful in doing so at various voltage classes. The Commission once again

directs TANGEDCO to submit a study report on methodology for computation of

voltage wise ‘cost to serve’ (CoS) along with the basis of allocation of different costs

and losses to various voltage levels. This shall be examined by the Commission and

approved with such modifications as it may deem fit or consider a better alternate

computation. The Commission also directs TANGEDCO to submit the action taken

report within 90 days of the issuance of this report.



June 2013

5.47 Finally in the absence of accurate and necessary information from TANGEDCO, the

Commission will base its calculation of cross subsidy on the average cost of supply as

done last year.

Average Cost of Supply and Cross subsidy reduction

5.48 At the outset the Commission brings out the fact that with no tariff increase to most of

the consumers and with increase in cost of supply compared to last tariff order, there

is an inherent decrease in cross subsidy levels.

5.49 Commission has worked out the prevailing cross-subsidy and the reduction in cross-

subsidy for the subsidizing consumers based on the Average cost of supply method.

Table 304: Cross subsidy trajectory estimated by the Commission

Categories

Average cost

of supply

(ACoS) FY14

ABR as per

Existing tariff

ABR as per

Proposed

tariff

Cross subsidy reduction

Last

order

ABR(ET)

/ACoS

ABR(PT)

/ACoS

HT Category

HT Industries 5.24 7.41 7.41 147% 141% 141%

Railway Traction 5.24 6.51 6.51 132% 124% 124%

Government

Educational

Institution Etc.

(HT)

5.24 5.42 5.42 114% 104% 104%

Pvt. Educational

Institutions etc. 5.24 6.84 6.84 139% 131% 131%

Commercial and

Other HT 5.24 8.61 8.61 187% 164% 164%

Lift Irrigation and

co-ops (HT) 5.24 3.50 3.50 71% 67% 67%

Temporary 5.24 10.68 10.68

204% 204%

Total HT 5.24 7.39 7.39 149% 141% 141%

LT Category

Domestic 5.24 3.44 3.44 69% 66% 66%

Huts 5.24 2.12 4.43 50% 41% 85%

Bulk supply 5.24 4.06 4.06 80% 77% 77%

Public Lighting &

Water Works 5.24 5.50 5.50 110% 105% 105%

Government

Educational

Institution

5.24 6.03 6.03 115% 115% 115%

Pvt. Educational

Institutions 5.24 7.37 7.37 137% 141% 141%

Places of Public

Worship (LT) 5.24 5.93 5.93 84% 113% 113%

Cottage and Tiny

Industries 5.24 4.02 4.02 84% 77% 77%

Power Loom 5.24 5.33 5.33 106% 102% 102%

Industries 5.24 6.20 6.20 127% 118% 118%

Agriculture &

Government seed 5.24 1.83 2.61 37% 35% 50%



June 2013

Categories

Average cost

of supply

(ACoS) FY14

ABR as per

Existing tariff

ABR as per

Proposed

tariff

Cross subsidy reduction

Last

order

ABR(ET)

/ACoS

ABR(PT)

/ACoS

farm

Commercial and

Other 5.24 7.53 7.53 153% 144% 144%

Temporary Supply 5.24 11.62 11.62 211% 222% 222%

Total LT 5.24 4.00 4.21 80% 76% 80%

Total LT+HT 5.24 4.72 4.89 100% 90% 93%

5.50 The Commission would like to note that there is inherent reduction in cross subsidy

being borne by the subsidising consumers as there has been an increase in the average

cost of supply but no increase in the tariff charged to consumers. The Commission

notes that the proportion of cross subsidy that the HT consumers are bearing has come

down from 49% to 41%, which is a positive step towards achieving the target

stipulated by the National Tariff Policy of +20% of average cost of supply. However,

since the average cost of supply has been increasing steadily, the subsidising

consumers have not been able to experience tariff reduction in absolute terms. Further

for the year FY 14, the tariffs have been increased only for two LT categories namely

Huts and Agriculture & Government seed farm which in-turn increases the realisation

from the subsidised consumers. For these two categories the recovery from tariff has

increased from 50% to 84% and 37% to 50% respectively. For the other subsidised

categories there is a marginal reduction in the recovery percentage caused due to the

increase in the average cost of supply.

5.51 Retail Tariff in State of Tamil Nadu was not revised for a period from FY 04 to FY

10, on account of non filing of the tariff petition by erstwhile TNEB. Cross-subsidy

has been in existence historically even in the period where there was no tariff

revision. The Commission also observes that tariff that was charged to most of the

categories of consumers was below average cost of supply. Hence, last year when

TANGEDCO had sought for pass through of revenue gap in the form of tariff

increase, the impact on each category of consumers was significant. In the light of

significant hike in tariff to all categories last year the Commission has approved the

proposition of tariff hike only for two categories as mentioned above this year, so as

to avoid tariff shock to the consumers of the State.

5.52 While the tariff for consumer categories have been approved as sought by

TANGEDCO with minor modifications as detailed in the next section, the revenue

gap considered for the year is not met entirely through the revision in tariff. To

address the shortfall for the year as well as of the past years, the Financial

Restructuring Plan (FRP) will be rolled out from the current financial year along with

amortisation of Regulatory Asset. Further it is possible that the actual revenue earned

by TANGEDCO may be higher or lower than that considered by the Commission, on

account of minor re-categorisation. The revenue shortfall/surplus, if any, will be trued

up at the time of truing up for FY 2013-14.



June 2013

Open Access Charges

Wheeling Charges

5.53 The Tamil Nadu Electricity Regulatory Commission (Terms and Conditions for

Determination of Tariff) Regulation – 2005 clearly stipulated the method for

computing the wheeling charges. The relevant portion has been extracted below:

86. Wheeling Charges for Open Access Customers

(1) The Distribution licensee shall provide open access to any consumer within

the area of his supply on payment of wheeling charges.

(2) The wheeling charges for a consumer category shall be based on costs of

Distribution licensee for its pure wire business. Thus all items of revenue

requirement of the Distribution licensee excluding cost of power purchase and

interest on Security Deposit from consumers shall be the cost of Distribution

licensee for his wire business.

5.54 The Electricity Act 2003 (the Act) allows non discriminatory Open Access to the

network of a Licensee on payment of applicable charges. To arrive at the wheeling

charge, TANGEDCO has proposed the Annual Distribution charge for FY 2013-14 as

shown in the table below. The approved Annual Distribution charge re-estimated by

the Commission and as filed by TANGEDCO in its petition are tabulated below.

Table 305: Annual Distribution Charges for FY 2013-14

S. No. Particular TANGEDCO

Rs. Crores

Approved

Rs. Crores

1 Net O&M Expenses 4,100.31 3,778.81

2 Interest on Loan 2,237.78 1,463.61

3 Interest on Working Capital 808.09 0.00

4 Depreciation 327.61 362.39

4 Return on equity 404.66 0.00

5 Other debits 15.73 19.93

6 Provision for Bad Debts 14.21 0.00

7 Annual Wheeling Charges 7,908.38 5,624.74

8 Less: Interest on Security Deposit 419.01 449.60

9 Net Annual Distribution Charges 7,489.38 5,175.14

10 Annual Wheeling Charges 1611.92 1247.58

5.55 As HT consumers are eligible for Open Access, the above charges have been

allocated to them, in the ratio of the HT distribution network to the total of HT and LT

distribution network. TANGEDCO has provided this ratio as 22:78 based on existing

HT and LT lines as on 31st March, 2012. Based on the revised data on HT and LT line

lengths as on 31st March 2013, submitted by TANGEDCO in its reply to data gaps,

the Commission has re-estimated the network ratio as follows.



June 2013

Table 306: Allocation of Wheeling Charges into LT & HT Category

Sl. No. Particulars TANGEDCO Approved

No.s Ratio No.s Ratio

1 HT Lines (lakh ckt. km.) 1.56 21.52% 1.84 24.11%

3 LT Lines (lakh ckt. km.) 5.67 78.48% 5.78 75.89%

Total 7.23

7.62

5.56 Based on the above ratio and the Annual Distribution charges as approved, the

wheeling charge per unit for the year FY 2013-14 estimated by the Commission are as

follows.

Table 307: Wheeling Charges per unit for FY 2013-14

Particulars FY 14

Energy fed into Grid (in MU) 79,703

230 kV Losses approved by the Commission 0.80%

230 kV Losses (MU) 638

Wheeling units - 230 kV (MU) 315

TANGEDCO - 230 kV Sales (MU) 721

Energy input at 110 kV (MU) 78,030

110 kV Losses approved by the Commission 1.90%

110 kV Losses (MU) 1,483

Wheeling units - 110 kV (MU) 1,575

TANGEDCO - 110 kV Sales (MU) 3,067

Energy Input at Distribution Periphery (MU) 71,905

Total Annual Wheeling Charges (Rs.Crs) 1247.58

Wheeling charges for Open Access Customer (Ps/ unit) 17.35

5.57 Based on the estimated sales and voltage wise losses the Commission has determined

the wheeling charge per unit as 17.35 paise/ kWh for FY 2013-14.

Cross Subsidy Surcharge

5.58 The Electricity Act 2003 clearly lays down the charges recoverable by the distribution

licensee for allowing open access. Extract of the same has been produced below.

Provisos to Section 42 (2) of Electricity Act 2003 stipulates as under:

“Provided that such Open Access shall be allowed on payment of a surcharge in

addition to the charges for wheeling as may be determined by the State Commission

Provided further that such surcharge shall be utilized to meet the requirements of

current level of cross-subsidy within the area of supply of the distribution licensee”



June 2013

5.59 The Tamil Nadu Electricity Regulatory Commission (Terms and Conditions for

Determination of Tariff) Regulation – 2005, under Section (3) Power to

determine tariff lays down the following:

3. Power to determine Tariff

(1) Under Section 62 of the Act, the Commission shall determine tariff and terms and

conditions therefor in the following cases:

………….

..............

(vi) Surcharge payable by the consumer who is allowed open access in

addition to the charges for wheeling under the first proviso to sub-section (2)

of section 42 of the Act and in accordance with the TNERC Open Access

Regulations.

5.60 Further the National Tariff Policy 2006, in Para 8.5 lays down the formula for

calculating the cross subsidy surcharge payable by open access consumers as follows:

Surcharge formula:

S = T - [C (1+L/100) + D]

Where:

S is the surcharge

T is the Tariff payable by the relevant category of consumers;

C is the Weighted average cost of power purchase of top 5% at the margin

excluded liquid fuel based generation and renewable power

D is the Wheeling charge

L is the system Losses for the applicable voltage level, expressed as a

Percentage

5.61 As per National Tariff Policy, the Cross Subsidy Surcharge has been determined by

TANGEDCO based on avoided cost methodology. TANGEDCO has determined the

5% marginal cost of power purchase in its petition for FY 2013-14 as 3.41 Rs./ kWh

and the same has been estimated by the Commission on the basis of merit order for

FY 2013-14 as 3.59 Rs./ kWh. The tables below capture the same.

Table 308: Weighted average cost of power purchase of top 5% at the margin as filed by TANGEDCO

Sl.

No Station

Units purchased Total purchase cost Cost per

unit

MUs Rs. Crores Rs./unit

1 ABAN 375 189 5.04

2 NTPC - Talcher II 3,567 1,102 3.09

3 Kudankulam Uni t - I 2,426 883 3.64

Total 6,368 2,174 3.41



June 2013

Table 309: Weighted average cost of power purchase of top 5% at the margin as approved by the

Commission

Station Units purchased Total purchase cost

Cost per

unit

MUs Rs. Crores Rs./unit

Penna 353 130 3.68

Mettur 353 130 3.59

Tuticorin Thermal

Power Station 2723 972 3.57

Total 3429 1232 3.59

5.62 Based on the above weighted average cost of marginal power stations, the

Commission has calculated the cross subsidy surcharge payable by HT consumers for

availing open access.

Table 310: Cross Subsidy Surcharge for HT Categories approved by the Commission (in Paise kWh)

Sl.

No Injection Voltage Drawal Voltage

Total Loss

(%)

Marginal

Cost of Power

Purchase

Wheeling

Charges

Weighted

Average

Power

Purchase Cost

1 230 kV 230 kV 0.80% 359 17.35 380

2 230 kV 110 kV 1.75% 359 17.35 383

3 230 kV 33 kV 2.08% 359 17.35 384

4 230 kV 22 kV 3.46% 359 17.35 390

5 230 kV 11 kV 3.51% 359 17.35 390

6 110 kV 230 kV 1.75% 359 17.35 383

7 110 kV 110 kV 2.70% 359 17.35 387

8 110 kV 33 kV 3.03% 359 17.35 388

9 110 kV 22 kV 4.41% 359 17.35 393

10 110 kV 11 kV 4.46% 359 17.35 394

11 33 kV 230 kV 2.08% 359 17.35 384

12 33 kV 110 kV 3.03% 359 17.35 388

13 33 kV 33 kV 3.36% 359 17.35 389

14 33 kV 22 kV 4.74% 359 17.35 395

15 33 kV 11 kV 4.80% 359 17.35 395

16 22 kV 230 kV 3.46% 359 17.35 390

17 22 kV 110 kV 4.41% 359 17.35 393

18 22 kV 33 kV 4.74% 359 17.35 395

19 22 kV 22 kV 6.12% 359 17.35 400

20 22 kV 11 kV 6.17% 359 17.35 400

21 11 kV 230 kV 3.51% 359 17.35 390

22 11 kV 110 kV 4.46% 359 17.35 394

23 11 kV 33 kV 4.80% 359 17.35 395

24 11 kV 22 kV 6.17% 359 17.35 400

25 11 kV 11 kV 6.23% 359 17.35 401



June 2013

Table 311: Cross Subsidy Surcharge for HT consumers

Sl.

No

Injection

Voltage

Drawal

Voltage

Industry Railway

traction

Government

Educational

Institution Etc.

Pvt.

Educational

Institutions

etc.

Commercial

and Other

Cross Subsidy Surcharge (Paise/kWh)

1 230 kV 230 kV 361.12 271.14 162.46 304.67 481.28

2 230 kV 110 kV 357.62 267.64 158.95 301.16 477.78

3 230 kV 33 kV 356.38 266.41 157.72 299.93 476.54

4 230 kV 22 kV 351.14 261.17 152.48 294.69 471.30

5 230 kV 11 kV 350.93 260.95 152.26 294.47 471.09

6 110 kV 230 kV 357.62 267.64 158.95 301.16 477.78

7 110 kV 110 kV 354.05 264.07 155.38 297.59 474.21

8 110 kV 33 kV 352.79 262.81 154.12 296.33 472.95

9 110 kV 22 kV 347.44 257.47 148.78 290.99 467.60

10 110 kV 11 kV 347.22 257.25 148.56 290.77 467.38

11 33 kV 230 kV 356.38 266.41 157.72 299.93 476.54

12 33 kV 110 kV 352.79 262.81 154.12 296.33 472.95

13 33 kV 33 kV 351.52 261.54 152.85 295.06 471.68

14 33 kV 22 kV 346.14 256.16 147.47 289.68 466.30

15 33 kV 11 kV 345.92 255.94 147.25 289.46 466.08

16 22 kV 230 kV 351.14 261.17 152.48 294.69 471.30

17 22 kV 110 kV 347.44 257.47 148.78 290.99 467.60

18 22 kV 33 kV 346.14 256.16 147.47 289.68 466.30

19 22 kV 22 kV 340.60 250.62 141.93 284.14 460.76

20 22 kV 11 kV 340.37 250.39 141.70 283.92 460.53

21 11 kV 230 kV 350.93 260.95 152.26 294.47 471.09

22 11 kV 110 kV 347.22 257.25 148.56 290.77 467.38

23 11 kV 33 kV 345.92 255.94 147.25 289.46 466.08

24 11 kV 22 kV 340.37 250.39 141.70 283.92 460.53

25 11 kV 11 kV 340.14 250.17 141.48 283.69 460.30

5.63 At the outset the Commission notes that there has been a marked shift in HT

consumers opting for open access, which has lead to the average billing rate to

increase substantially. The Commission has tabulated below the increase in wheeling

units over the last three years, representing the number of units sourced through other

sources apart from the utility.

Table 312: Wheeled energy over the last there years from FY 2010-11 to FY 2012-13


MU's MU's MU's

Sale to HT Industrial, HT

Commercial and Educational

Institutions

13,857 11,664 8,646

Wheeling for HT Industries 4,716 6,750 7,871



June 2013


MU's MU's MU's

Wheeling for HT Commercial 155 289 318

Wheeling for Educational Institutions 7 10 11

Total Wheeling Units 4,878 7,049 8,200

Total Sales (Including Wheeling) 18,735 18,713 16,846

Percentage of Wheeling Units 26.04% 37.67% 48.67%

5.64 It can be inferred from above table that percentage of wheeling units from 26.04% in

FY 2010-11 increased to 48.67% in FY 2012-13. The R&C measures in place are

making the consumers to depend on other available options for power procurement.

The utility is losing significant revenue due to reduced HT sales. Hence, the per unit

cross subsidy surcharge has marginally increased due to higher ABR due to loss of

revenue with HT consumers moving out of the system.However, due to better energy

availability in FY 2013-14 the number of consumers, other than those consumers who

have permanently left the system due to captive wheeling, opting to source power

through open access is expected to reduce and cause the average billing rate to reduce.

Grid Availability Charges

5.65 TANGEDCO in its petition has requested the Commission for approval of energy

charges plus the energy equated demand charges applicable to HT Temporary supply

tariff as Grid Availability Charges.

5.66 TANGEDCO submitted that the Grid Availability Charges are for providing standby

arrangements to Open Access customers in the following cases:

• In case of outages of Generator supplying to an open access consumer.

• For start up power by generator.

• When the generation as per schedule is not maintained and when the drawal by the open

access consumer is in excess of the schedule.

5.67 The tariff applicable to start-up power has been dealt in Tariff schedule of this Order

5.68 With regards grid availability charges for open access consumers, Commission

approves following norms

1) Scheduling of all transactions pursuant to grant of long-term open access or

medium-term open access or short-term open access shall be carried out on

day-ahead basis in accordance with the relevant provisions of IEGC/CERC

Open Access Regulations for inter-State transactions and in accordance with

State Grid Code/Commission’s Regulations / orders for intra-State

transactions.



June 2013

2) Deviations between the schedule and the actual injection/drawal in respect of a open access customer who is not a consumer of the distribution licensee and

the Generating Stations, shall come under the purview of the intra-state ABT,

as notified by the Commission and shall be settled based on the composite

accounts for imbalance transactions issued by SLDC on a weekly cycle in

accordance with the UI charges specified by the Commission. Billing,

collection and disbursement of any amounts under the above transactions shall

be in accordance with the Commission’s orders on Intra-state ABT, as may be

applicable from time to time. Till the implementation of Intra-State ABT, the

imbalance charge shall be at the rate of applicable temporary supply tariff.

3) In case of deviation by Open Access Customer who is also a consumer of

distribution licensee, the difference between the applicable scheduled open

access load and actual drawl shall be accounted Block wise and shall be

settled in accordance with the following:

a) The energy consumption of such customer shall be recorded in 15 minutes

time block.

b) Deviations between the schedule and the actual injection/drawal shall come under the purview of the intra-state ABT, as notified by the

Commission and shall be settled based on the composite accounts for

imbalance transactions issued by SLDC on a weekly cycle in accordance

with the UI charges specified by the Commission. Billing, collection and

disbursement of any amounts under the above transactions shall be in

accordance with the Commission’s orders on Intra-state ABT, as may be

applicable from time to time. Till the implementation of Intra-State ABT,

the imbalance charge shall be regulated as below:

i. In case of actual energy/demand drawl is more than the scheduled

energy/demand but within the permitted energy/demand (based on

contracted load and energy or quota demand and energy as applicable),

customer shall be liable to pay for such over drawl at the applicable

tariff rates of that category of consumer as determined by the

Commission from time to time.

ii. In case of actual energy/demand drawl is more than the scheduled

energy/demand drawl and also more than the permitted energy/demand

(based on contracted load and energy or quota demand and energy as

applicable), payment for the capacity above the contract demand shall

have to be made at the excess demand/energy charges as specified by

the Commission for such categories of customers in the

regulation/order.



June 2013

Additional Surcharge

5.69 TANGEDCO has in its petition clearly stated that Additional Surcharge will not be

charged by it as there is shortage of available capacity. It has further elaborated that

the Additional surcharge will become applicable only if it is conclusively

demonstrated that its obligation as a licensee in terms of existing power purchase

commitments, has been and will continue to be stranded, or there is an unavoidable

obligation and incidence to bear fixed costs consequent to such a contract.

5.70 Hence the Commission accepts the proposal of TANGEDCO that Additional

Surcharge will be levied on the Open access consumers if and only if stranded

capacity costs are established by TANGEDCO

Restoration Charges

5.71 Any default in payment of the various OA charges specified in the regulations, within

the time stipulated by the Commission will result in the discontinuance of the open

access to the consumer. Restoration of such discontinued open access shall be subject

to the payment of reconnection charges applicable to that voltage level of the

customer as approved by the Commission in the Order on “Non-tariff related

Miscellaneous charges” issued from time to time.

Fuel and power purchase cost adjustment mechanism (FPCA)

5.72 Electricity Act 2003 under section 62 sub section 4, states

“No tariff or part of any tariff may ordinarily be amended more frequently, than once

in a financial year, except in respect of any changes expressly permitted under the

terms of any fuel surcharge formula as may be specified.”

The National Tariff Policy under provision 5.3(h) (4)

“Uncontrollable costs should be recovered speedily to ensure that future consumers

are not burdened with past costs. Uncontrollable costs would include (but not limited

to) fuel costs, costs on account of inflation, taxes and cess, variations in power

purchase unit costs including on account of hydro thermal mix in case of adverse

natural events,”

The APTEL in its Order O.P. 1 of 2011 dated 11-11-2011 under para 65 (vi) has

stated that:

“(vi) Fuel and Power Purchase cost is a major expense of the distribution Company

which is uncontrollable. Every State Commission must have in place a mechanism for

Fuel and Power Purchase cost in terms of Section 62 (4) of the Act. The Fuel and

Power Purchase cost adjustment should preferably be on monthly basis on the lines of



June 2013

the Central Commission’s Regulations for the generating companies but in no case

exceeding a quarter. Any State Commission which does not already have such

formula/mechanism in place must within 6 months of the date of this order must put in

place such formula/ mechanism.”

5.73 TANGEDCO in its current petition has not proposed the recovery of actual fuel price

through the Fuel and power purchase cost adjustment mechanism. The Commission

had proposed the below formula to enable TANGEDCO to recover the fuel price

variations in its tariff order dated 30th March 2012.

(1) Adjustment Amount

A= CVC.GEN + CVC.pp

A= Adjustment Amount (during this quarter)

CVC.GEN = Change in Variable Cost of TANGEDCO’s thermal stations.

CVC.pp = Change in Power Purchase cost from other sources excluding own

generation.

(2) Chargeable FPCA from the consumers

Metered Category

FPCAM= AM / UM

Un-Metered Category

FPCAHP= AHP / LHP

AM and AHP are to be arrived at by apportioning A on the basis of consumption of

metered and un-metered category.

UM is the number of units billed to metered consumers during quarter under

consideration

LHP is sum of the connected load of un-metered consumers at the end of each month

for the quarter under consideration.

(3) The approved formula is subject to the following:

i. Commission can review the formula at any stage.

ii. For levy of FPCA surcharge, petition containing the basis of

calculations/authenticated data shall be submitted by TANGEDCO by

August, November, February and May end each year for the FCA increases

for the 1st,2

nd, 3

rd and 4

th quarter, respectively, of each year.

iii. The FPCA amount shall be calculated on the basis of norms fixed by the

Commission for various parameters including SHR, Transit loss of coal,



June 2013

Auxiliary consumption at the thermal plants, T&D losses or any other

parameter as may be specified by the Commission.

iv. The FPCA for the first quarter of a financial year, i.e., from April to June shall

be worked out by TANGEDCO and submitted to the Commission by end of

August of the year and approved by the Commission by the end of September

of the same year so that FPCA is charged from October onwards. Similarly,

FPCA for 2nd quarter of a financial year, i.e., from July to September shall be

worked out by TANGEDCO and submitted to the Commission by November

of that year and approved by the Commission by December of the same year,

so that Fuel and Power Purchase Cost Adjustment is charged from January

onwards. Similar schedule shall be followed for charging FCA for third and

fourth quarters.

v. Any under recovery/over recovery in cost pertaining to FPCA would be trued

up based on the Audited accounts as a part of truing up exercise in the tariff

determination process.

5.74 The Commission had in principle approved the implementation of FPCA mechanism,

and also directed TANGEDCO to submit its preparedness, implementation plan and

sample FPCA calculations for the last quarter, to the Commission for approval, within

30 days of issuance of last year’s Order.

5.75 In line with the above directive TANGEDCO had submitted sample calculations for

the last quarter for which data was available to the Commission, the same was

withdrawn on 18th October 2012 and no further petition for recovery of actual fuel

cost was filed. The Commission opines that this mechanism has been designed to

benefit TANGEDCO by allowing it to recover its actual fuel cost, subject to prudence

check in a speedy manner.

5.76 Hence in line with the in principle approval of the implementation of the FPCA

mechanism in the State, the Commission has decided not to allow the 4% escalation

in fuel price as sought for by TANGEDCO in its petition for the current MYT period.

TANGEDCO shall file quarterly FPCA petitions to the Commission to recover the

actual cost of fuel incurred and the actual cost of power purchase, if the same are in

variance from the figures approved in this Tariff Order.

5.77 TANGEDCO is directed to file its FPCA petitions to the Commission starting

this October 2013 as outlined in the formula and filing mechanism for

calculating the FPAC.

Tariff rationalization and revision of retail supply tariffs

PF Incentive

5.78 The Commission has received comments from industrial consumers to reinstate the

incentive for maintaining near about unity power factor.



June 2013

Regulation 12 of TNERC Tariff Regulations states as under:

“12. Power Factor

The Commission may direct certain categories of consumers to maintain power factor

at a prescribed level and allow incentive / disincentive for maintaining above / below

the prescribed level”

5.79 The amendment to the Supply Code Regulation introduced in Nov 2010 clearly brings

out the reasons for removing the power factor incentive. The Commission is

following same regulation for disincentive in PF below the prescribed level. Hence all

the consumers are required to maintain the PF at the minimum prescribed levels in the

regulation.

TOD Tariff

5.80 The Appellate Tribunal’s directive on peak hour charges in the Appeal No. 257 of

2012 dated 9th April, 2013, has been extracted below.

“14.4 We notice that the State Commission has provided for 20% extra charge on

energy charges for the energy consumed during peak hours i.e. 6:00 AM to 9:00 AM

and 6:00 PM to 9:00 PM for the HT industrial consumers. On the other hand the HT

industrial consumers are allowed a reduction of 5% in the energy charges for the

consumption during off-peak hours i.e. from 10:00 PM to 5:00 AM, as an incentive

for night hours consumption. These charges/incentive have been continuing from the

past. However, the State Commission has decided to maintain the rates which were

prevailing earlier and has not decided the rates based on some study. We find that the

State Commission has provided disincentive for peak hours drawal in view of high

cost of procurement of expensive power during peak hours and balance demand.

However, incentive for off-peak hours has been continued despite shortage during the

off-peak hours.

14.5 The aim of providing differential tariff for peak and off-peak hours is to shift

load from peak to off-peak hours with a view to optimize the generation capacity and

minimize the cost of power procurement for the distribution licensee. However, in the

absence of a specific study for pricing of electricity at off-peak and peak hours, the

weighted average of energy rates for the peak,off-peak and normal hours (other than

peak and off-peaks) should be equal to the average energy rate decided for a

particular category of consumer. In the present case when no specific study for

peak/off-peak pricing has been carried out, the energy rate of the tariff decided by the

Commission for the Appellant's category is lower than the weighted average rate of

energy for peak, off-peak and the normal hours.

14.6 We also notice that the Restriction and Control Measures are also in vogue in

the State and the HT industrial consumers are allowed a small quota of demand and

energy during the peak hours. The drawal in excess of the specified quota results in

imposition of penal rates at substantially higher rate than the normal rates. The State

Commission may also consider whether in view of the Restriction and Control



June 2013

Measures and penal rates of excess drawal over the peak hours demand and energy

quota whether there is any purpose of having a differential energy tariff ff-peak hours.

14.7 We, therefore, direct the State Commission to reconsider and re-determine the

differential pricing of energy during peak and off-peak hours. Accordingly, the matter

is remanded back to the State Commission.”

5.81 The Commission feels that a detailed study pertaining to load pattern needs to be done

by TANGEDCO. Hence Commission pending a detailed study, proposes to retain the

peak hour charges and off peak rebate at the exiting levels. Commission directs

TANGEDCO in this order to carry out a detail study on this regard and furnish the

same to the Commission. Accordingly after reviewing the report furnished by

TANGEDCO, Commission will address this issue in the next tariff order.

Continuation of ToD peak charge

5.82 The Commission has sought and analysed the system load curve data from July 2012

to May 2013. It can be inferred from the load data that there is no surplus even in the

off- peak hours, even in the month of May to September when wind energy is

available. Similarly in the peak hour, it is only the restricted demand under R&C that

is being met. Hence it can be concluded that there is a shortage in the peak hours and

no surplus power available in the off peak hours.

5.83 Also with respect to the question of discontinuing the peak hour charge when R&C is

being imposed, the Commission would like state that R&C by design enforces

demand cut, in a situation of shortage. This mechanism unlike peak hour charge is not

aimed at shifting load to other time slabs, as this mechanism ensures reduction in

demand across all time slabs. Hence when even in the case of reduced demand the

utility is procuring costly power to supply to its consumers, the question of

disallowing that as a pass through does not arise.

5.84 Various legislative and legal frameworks existing in the country which promote

implementation of TOD as an important DSM tool are:

Electricity Act

The relevant provision of Section 62(3) of the Act which guides the SERCs to

incorporate TOD tariff is:

“The Appropriate Commission shall not, while determining the tariff under this Act,

show undue preference to any consumer of electricity but may differentiate according

to the consumer's load factor, power factor, voltage, total consumption of electricity

during any specified period or the time at which the supply is required or the

geographical position of any area, the nature of supply and the purpose for which the

supply is required.”



June 2013

Tariff Policy

The relevant provisions of the Tariff Policy, which define the tariff components and

their applicability states as under:

“8.4 Definition of tariff components and their applicability

1. Two-part tariffs featuring separate fixed and variable charges and Time

differentiated tariff shall be introduced on priority for large consumers (say,

consumers with demand exceeding 1 MW) within one year. This would also help in

flattening the peak and implementing various energy conservation measures.”

National Electricity Policy

Clause: 5.9.6

In order to reduce the requirements for capacity additions, the difference between

electrical power demand during peak periods and off-peak periods would have to be reduced.

Suitable load management techniques should be adopted for this purpose. Differential tariff

structure for peak and off peak supply and metering arrangements (Time of Day metering)

should be conducive to load management objectives. Regulatory Commissions should ensure

adherence to energy efficiency standards by utilities.

5.85 Thus the Commission will maintain status quo for applying the time of day charges to

prescribed consumers till the time the issue remanded by APTEL recently in Appeal

No. 257 of 2012 is decided.

5.86 The Commission further directs TANGEDCO to conduct a study of power purchase

for consumption during peak hours and also take into cognisance the time slots during

which the R&C is imposed. This will help in obtaining a clear understanding of the

additional costly power purchase on one hand as well as relief availed under R&C and

its impact on power purchase on the other.

Applicability of Revised Tariffs

5.87 The revised tariffs will be applicable from 21.06.2013. For cases where there is a

billing cycle difference for a consumer with respect to the date of applicability of the

revised tariff, the revised tariff should be made applicable on a pro-rata basis for the

consumption. The bills for the respective periods as per existing tariff and revised

tariffs shall be calculated based on the pro-rata consumption during each of these

periods (units consumed during respective period arrived at on the basis of average

unit consumption per day multiplied by number of days in the respective period

falling under the billing cycle).



June 2013

A6: TARIFF SCHEDULE

TARIFF FOR HIGH TENSION SUPPLY CONSUMERS

6.1 General Provisions applicable for High Tension Supply

i. Categories of supply: The categories of supply are as specified in the Tamil Nadu

Electricity Distribution Code and Tamil Nadu Electricity Supply Code. The HT

tariff specified for different categories of HT consumers are also applicable to the

consumers who are supplied at EHT level in accordance with above said Codes.

ii. Harmonics: As specified in the Supply Code, when the consumer fails to provide

adequate harmonic filtering equipment to avoid dumping of harmonics into

Licensee’s network beyond the permissible limits as specified by CEA regulations,

the consumer is liable to pay compensation at 15% of the respective tariff. As and

when the consumer brings down the harmonics within the limit, compensation

charges shall be withdrawn. The measurement of harmonics shall be done by the

Distribution Licensee using standard meters/equipment in the presence of

consumers or their representatives. This compensation charges is applicable to HT-I

& HT-III category of consumers. TANGEDCO shall give three months clear notice

to all consumers under these categories stating that they shall pay 15%

compensation charges if the harmonics introduced by their load is not within the

limits set by CEA. The TANGEDCO shall implement the compensation provision

after three months period from the date of measurement if the harmonics measured

is more than the permissible limits.

iii. In case of supply under HT Tariff, except for HT tariff-IV and V, supply used for

creating facilities for the compliance of Acts/Laws or for the facilities incidental to

the main purpose of the establishment of the consumer, such as facilities extended

to their employees/students/patients/residents as the case may be, within the

premises of the consumer, shall be considered to be bonafide purpose. However, if

such facilities are extended to the public, the energy consumption to such facilities

shall be metered by the licensee separately and only the energy charged under

appropriate LT tariff. Such metered energy consumption shall be deducted from the

total energy consumption registered in the main meter of the HT/EHT supply for

billing.

iv. In case of supply under HT Tariff IA, IIA, II B and III, the use of electricity for

residential quarters, within the premises, shall be metered separately by the licensee

if opted by the consumer and only the energy shall be charged under LT Tariff IC.

Such metered consumption shall be deducted from the total consumption registered

in the main meter of the HT/EHT supply for billing.

v. In case of HT supply under IA, IIA, IIB, III, the supply used for any additional

construction of building within the consumer’s premises not exceeding 2000 square

feet may be allowed from the existing service and charged under the existing tariff.

The use of electricity for the additional construction beyond 2000 square feet and

lavish illumination (as defined under LT tariff VI) shall be metered separately by

the licensee and only the energy shall be charged under LT Tariff VI. Such metered



June 2013

energy consumption shall be deducted from the total consumption registered in the

main meter of the HT/EHT supply for billing.

vi. Low Power Factor Compensation: In respect of High Tension service

connections the average power factor of the consumers installation shall not be less

than 0.90. Where the average power factor of High Tension service connection is

less than the stipulated limit of 0.90 the following compensation charges will be

levied.

Particulars Dispensation of Power Factor compensation

Below 0.90 and

up to 0.85

One per cent of the current consumption charges for every reduction

of 0.01 in power factor from 0.90

Below 0.85 to

0.75

One and half per cent of the current consumption charges for every

reduction of 0.01 in power factor from 0.90

Below 0.75 Two per cent of the current consumption charges for every reduction

of 0.01 in power factor from 0.90

vii. Billable Demand: In case of HT Consumers, maximum Demand Charges for any

month will be levied on the kVA demand actually recorded in that month or 90% of

the contracted demand whichever is higher.

Provided, that whenever the restriction and control measures are in force, the

billable demand in case of two part tariff for any month will be the actual recorded

maximum demand or 90% of demand quota, as fixed from time to time through

restriction and control measures, whichever is higher.

6.2 High Tension Tariff I A:

Tariff category

Tariff

Demand Charge

in Rs/kVA/

month

Energy charge

in Paise per kWh

(Unit)

High Tension

Tariff I A 300 550

i. This Tariff is applicable to:

a) All manufacturing and industrial establishments and registered factories

including Tea Estates, Textiles, Fertilizer Plants, Steel Plants, Heavy Water

Plants, Chemical plants,

b) Common effluent treatment plants, Industrial estate’s water treatment/supply

works,



June 2013

c) Cold storage units

ii. This tariff is also applicable to Information Technology services as defined

in the ICT Policy 2008 of Government of Tamil Nadu. The definition is

reproduced below:

“IT services are broadly defined as systems integration, processing services,

information services outsourcing, packaged software support and

installation, hardware support and installation.”

Information Technology Services includes:

a) Systems integration includes:

1) Network Management Services

2) Applications Integration

b) Processing services includes:

1) Outsourced Services in Banking, HR, finance, Technology and other areas

2) Outsourced Bank office support or Business transformation and

Process Consulting Services.

c) Information Services Outsourcing includes:

1) Outsourced Global Information Support Services

2) Knowledge Process Outsourcing

3) Outsourced Global Contact Centre Operations

4) Outsourced Process Consulting Services.

d) Packaged Software Support and Installation includes:

1) Software Design and Development, Support and Maintenance

2) Application installation, support and maintenance

3) Application testing.

e) Hardware Support and Installation includes:

1) Technical and network operations support

2) Hardware installation, administration and management



June 2013

3) Hardware infrastructure maintenance and support

iii. The HT Industrial consumers (HT IA) shall be billed at 20% extra on the

energy charges for the energy recorded during peak hours. The duration of

peak hours shall be 6.00 A.M to 9.00 A.M and 6.00 P.M to 9.00 P.M.

iv. The HT Industrial Consumers (HT I A) shall be allowed a reduction of 5%

on the energy charges for the consumption recorded during 10.00 P.M to

5.00 A.M as an incentive for night consumption.

v. High Tension Industries under Tariff I-A having arc, induction furnaces or

steel rolling process the integration period for arriving at the maximum

demand in a month will be fifteen minutes.

6.3 High Tension Tariff I B:

Tariff

category

Tariff

Demand

Charge

in Rs/kVA/

month

Energy charge

in Paise per kWh (Unit)

High

Tension

Tariff I B

250 550

i. This tariff is applicable to Railway traction.

6.4 High Tension Tariff II-A

Tariff category

Tariff

Demand Charge

in Rs/kVA/ month

Energy charge

in Paise per kWh

(Unit)

High Tension

Tariff II A 300 450

i. This tariff is applicable for the following services under the control of

Central/State Governments /Local Bodies/TWAD Board/CMWSSB:

a) Educational institutions including government aided educational institutions

and Hostels.

b) Teaching and Training institutions of Ministry of Defence and CRPF

establishments,

c) Hospitals, Primary Health Centres and Health Sub-Centres, Veterinary

Hospitals, Leprosy Centres and Sub-Centres.



June 2013

d) Public Water works and sewerage works and Desalination plants,

e) Residential colonies and Housing complexes, Senior citizen communities,

Old age Homes and Orphanages,

f) Public Lighting and Electric crematorium.

g) Public Libraries and Art Galleries,

h) Research Laboratories and institutions

i) Dairy units

ii. This tariff is also applicable to the following

a) Hospitals and Rehabilitation centres, Training & Rehabilitation centres, Old

Age Homes and Orphanages run by charitable trusts which offer totally free

treatment/services for all categories of patients/inmates on par with

government hospitals and institutions.

b) Desalination plant at Kudankulam Nuclear Power Plant and Minjur

Desalination plant of Chennai Water Desalination Ltd. Water Supply Works

by new Tirupur Area Development Corporation as long as they supply

drinking water predominantly to local bodies/public.

c) Single point supply to Cooperative group housing society and for the residential purpose of the employees as specified in “The Electricity

(Removal of difficulties) Eighth Order 2005”.

d) Actual places of public worship.

6.5 High Tension Tariff II – B :

Tariff category

Tariff

Demand Charge in

Rs/kVA/ month

Energy charge in

Paise per kWh

(Unit)

High Tension

Tariff II B 300 550

i. The tariff is applicable to all Private educational institutions and hostels run

by them.



June 2013

6.6 High Tension Tariff III :

Tariff category

Tariff

Demand Charge

in Rs/kVA/ month

Energy charge

in Paise per kWh

(Unit)

High Tension Tariff

III 300 700

i. This tariff is applicable to all other categories of consumers not covered

under High Tension Tariff IA, IB, IIA, IIB, IV and V.

6.7 High Tension Tariff IV :

Tariff

category

Approved Tariff rate Subsidy

for

Energy

Charges

in Paise

per kWh

Tariff rate payable by

Consumer

Demand

Charge

in

Rs/kVA/

month

Energy

charge

in Paise

per kWh

Demand Charge

in Rs/kVA/

month

Energy

charge

in Paise

per kWh

High

Tension

Tariff IV

Nil 350 350 Nil Nil

i. This tariff is applicable to the Lift Irrigation Societies for Agriculture

registered under Co-operative Societies or under any other Act.

6.8 High Tension Tariff V

Tariff category

Tariff

Demand Charge

in Rs/kVA/ month

Energy charge in

Paise per kWh

(Unit)

High Tension

Tariff V 300 950

i. This tariff is applicable to Temporary supply for construction and for other

temporary purposes.

a) For this category of supply, the initial/in-principle approval for such construction or to conduct such temporary activity obtained by the applicant

from the appropriate authority, wherever necessary, is adequate to effect the

supply.

b) In case of conversion of temporary supply into applicable permanent supply,

the same shall be done subject to compliance of codes/regulations/orders.



June 2013

c) This tariff is also applicable to start-up power provided to generators. The generators are eligible to get start-up power under this tariff after declaration

of CoD. The demand shall be limited to 10% of the highest capacity of the

generating unit of the generating station or the percentage auxiliary

consumption as specified in the regulation, whichever is less. The supply

shall be restricted to 42 days in a year. Drawal of power for a day or part

thereof shall be accounted as a day for this purpose. Power factor

compensation charges are not applicable for start-up power.

TARIFF FOR LOW TENSION SUPPLY CONSUMERS

6.9 General Provisions applicable for Low Tension Supply

i. All motors/pump sets connected in this category of supply shall be certified /

approved by BIS/BEE and motors/pump sets of 3 HP and above shall be

provided with adequate BIS certified capacitors. Non compliance shall invite

compensation charges as specified in the Codes/regulations.

ii. In case of LT Tariff III-B and LT Tariff V, all services with a connected load

of 18.6 kW (25 HP) and above should maintain a power factor of not less

than 0.85. Where the average power factor of Low Tension Service

connection is less than the stipulated limit of 0.85 the following

compensation charges will be levied.

Power Factor Dispensation of Power Factor compensation

Below 0.85 and upto

0.75

One per cent of the current consumption charges for

every reduction of 0.01 in power factor from 0.85.

Below 0.75 One and half per cent of the current consumption

charges for every reduction of 0.01 in power factor

from 0.85

iii. In the event of disconnection of services, the consumers shall be liable to pay

the fixed charges applicable for the respective category during the

disconnection period.

iv. In case of LT Tariff IIB 1, II B2, IIC, IIIA 1, IIIA2, IIIB, V and VI, the fixed

charges shall be calculated based on the contracted demand.

v. Supply used for any additional construction of building not exceeding 2000

square feet within the consumer’s premises shall be charged under the

respective existing tariff except in case of LT tariff I-B and IV. The use of

electricity for the additional construction purposes beyond 2000 square feet

shall be provided with a separate service connection by the licensee and

charged under LT Tariff VI.



June 2013

6.10 Low Tension Tariff 1-A :

Tariff

Consumption slabs –

Range in kWh(units)

and billing period

(one or two months)

Approved Tariff rate Subsidy

for

Energy

Charges

in paise /

kWh

Tariff rate payable by

consumer

Fixed charges

(Rupees per

month)

Energy

charges

in paise /

kWh

Fixed

charges

(Rupees per

month)

Energy

Charges in

paise / kWh

Low

Tension

Tariff I-A

For consumers who consume upto 50 units per month or 100 units for two months

From 0 to 50 units per

month (or) 0 to 100

units for two months

10

260

160 10

100

For consumers who consume from 51 units to 100 units per month (or) 101 to 200 units for two

months

From 0 to 100 units

per month (or) 0 to

200 units for two

months

10

280

130 10

150

For consumers who consume from 101 units to 250 units per month (or) 201 units to 500 units for

two months

From 0 to 100 units

per month (or) 0 to

200 units for two

months 15

300 100

15

200

From 101 to 250 units

per month (or) 201 to

500 units for two

months

400 100 300

For consumers who consume 251 units and above per month (or) 501 units and above for two months

From 0 to 100 units

per month (or) 0 to

200 units for two

months

20

300 Nil

20

300

From 101 to 250 units

per month (or) 201 to

500 units for two

months

400 Nil 400

From 251units and

above per month (or)

501 units and above

for two months

575 Nil 575

On account of Government subsidy, there will be no fixed and energy charges for Handloom

consumers consuming up to 100 units for two months and if consumption exceeds 100 units for 2

months they will be charged as per slab mentioned above and Rs. 100 will be deducted from the bill

amount.

i. This tariff is applicable to the following:

a) Domestic/Residential purposes of lights, fans, Air conditioners, radio/TV

and all other home appliances.

b) Supply used in the house/residence/premises for the following purpose with

a total connected load not exceeding 2 kW.



June 2013

1. To provide lighting, water and other facilities to domestic animals/pets

including chaff cutting, milking etc.

2. Watering for gardening including growing of trees in and around

residential houses/buildings.

c) Handlooms in residences of handloom weavers and handlooms in sheds

regardless of use of outside labour and where energy is availed of only for

lighting, fans and all other residential uses.

d) Public conveniences and Integrated woman sanitary Complexes.

e) Community Nutrition Centres, Anganwadi Centres and Nutritious Meal

Centers.

f) Old Age Homes, Leprosy Centers and sub centres. Orphanages, Homes for

destitute run by Government/Local bodies/Charitable Institutions rendering

totally free services.

g) Consulting rooms of size limited to 200 square feet of any professionals

attached to the residence of such professionals. This facility is extended

exclusively to take advantage of using the residence by the professionals.

h) In respect of multi tenements/residential complexes supply used for common

lighting, water supply, lift and such other facilities provided only to the

residents alone may be given a separate connection and charged under this

tariff. Only one service connection shall be given for the premises for all

common facilities.

i) In respect of multi tenements/multistory flats/residential complexes having

both domestic and non-domestic utilities, common facilities such as common

lighting, common water supply, lift and such other facilities will be charged

under this tariff only if the non-residential built up area does not exceed

25% of the total built up area.

j) In multi tenements residential buildings/Group Houses the additional service

connections requested by the owners/tenants shall be given. If only a meter is

required to effect the additional service connection, service line charges shall

not be collected.

k) Electric crematorium of local bodies.

l) Handicraft/Artisan works carried out by Potters, Goldsmiths etc. attached to

the residence, done predominantly by self or family members using a

connected load not exceeding 1 kW. This facility is extended exclusively to

take advantage of utilizing the space in and around the residence and

participation of family members in the small scale production.



June 2013

m) Any additional lights, serial lights etc. used in the pandals/shamiana and in

the premises of the existing domestic/residential service connection of the

consumer for a period not exceeding one week at a time, with a connected

load not exceeding 3 kW for the family functions/occasions.

6.11 Low Tension Tariff I-B:

Tariff Description

Approved Tariff Rate

Subsidy for

Fixed

Charges/

Energy

Charge

Tariff Rate payable by

Consumer

Energy

charges

in Paise /

kWh

Fixed

charges

(Rupees /

Month)

Fixed

Charges

(Rupees /

Month)

Energy

charges in

Paise / kWh

Low

Tension

Tariff

I-B

Till

installation of

Energy Meter

Nil 125

125 Rupees

/service/

Month

Nil Nil

On Installation

of Energy

Meter

430 Nil 430

Paise/kWh Nil Nil

i. This tariff is applicable to huts in Village Panchayats and special grade

panchayats, houses constructed under Jawahar Velai Vaiippu Thittam,

TAHDCO Kamarajar Adi Dravidar housing schemes, huts in Nilgiris District

and hut with concrete wall in the schemes of state and central Governments.

This tariff is applicable subject to following conditions:

a) Hut means a living place not exceeding 250 square feet area with mud wall

and the thatched roof / tiles / asbestos / metal sheets like corrugated G.I.

sheets for roofing/ concrete Roof and concrete wall with specification of

square feet as approved in the schemes of State/ Central Government.

b) Only one light not exceeding 40 watts shall be permitted per hut.

c) As and when the government provides other appliances such as Colour TV,

fan, Mixie, Grinder and Laptops to these hut dwellers, the usage of

appropriate additional load may be permitted.

ii. Whenever the norms prescribed in (a) to (c) above is violated, the service

category shall be immediately brought under Low Tension Tariff I-A and

billed accordingly



June 2013

6.12 Low Tension Tariff I-C:

Tariff

Tariff

Energy charges in

paise / kWh

Fixed charges (Rupees

/ Month)

Low Tension Tariff I-C

400

50

i. This tariff is applicable to LT bulk supply for residential colonies of

employees such as railway colonies, plantation worker colonies, defence

colonies, Police Quarters, Residential quarters of Koodankulum Nuclear

power project etc.

ii. The energy charge of this tariff is also applicable for the HT/EHT consumers

who opt for extending supply under this category for their residential

colonies / quarters.

iii. Single point supply to Cooperative group housing society and for the

residential purpose of the employees as specified in “The Electricity

(Removal of difficulties) Eighth Order 2005”.

6.13 Low Tension Tariff II-A:

Tariff Energy Charges in paise/KWh fixed charges

(Rupees /Month)

Low Tension

Tariff II-A

550 Nil

i. This tariff is applicable to Public Lighting by Government/Local Bodies and

Public Water Supply & Public Sewerage System by Government/Local

Bodies /TWAD Board/CMWSSB.

ii. Private agriculture wells/private wells hired by Government/Local

bodies/CMWSSB/TWAD Board/ to draw water for public distribution.

iii. Public Water Supply by New Tirupur Area Development Corporation as

long as they supply drinking water predominantly to local bodies/public and

Public Water Supply in plantation colonies.

iv. Separate service connections for street lights for SIDCO and other industrial

estates.

v. Supply to Railway level crossings.



June 2013

6.14 Low Tension Tariff II-B (1)

Tariff

Tariff

Energy charges in

paise / kWh

Fixed charges

(in Rupees per kW

per month)

Low Tension Tariff II-B

(1)

500 50

i. This tariff is applicable to the following entities owned or aided by the

Government/Government Agencies/Local Bodies:

a) Educational/Welfare Institutions and Hostels run by such institutions, Other

Hostels, Youth/Student Hostels and Scouts camps.

b) Hospitals, Dispensaries, Primary Health Centers & sub-centers and

Veterinary Hospitals.

c) Research Laboratories/Institutes,

d) Elephant Health camp

e) State Legal Udhavi Maiyam.

f) Art Galleries and Museums

g) Public libraries

ii. This tariff is applicable to the following entities which offer totally free

services.

a) Dispensaries, Creches and Recreation centers.

b) Libraries.

c) Emergency accident relief centers on highways, Hospitals and Rehabilitation

Centres for mentally ill & blind and others, Terminal cancer care centre and

Hospital in Tribal areas.

d) Institutes run for /by the physically challenged.

e) Training & Rehabilitation centres.

f) Student Hostel.

iii. This tariff is also applicable to Private Art Galleries and Museums run with

service motive.



June 2013

6.15 Low Tension Tariff II-B (2)

Tariff

Tariff

Energy charges

in paise / kWh

Fixed charges

(in Rupees per kW

per month)

Low Tension Tariff II-B (2) 650 50

i. This tariff is applicable to Private educational institutions and hostels run by

them.

6.16 Low Tension Tariff II-C:

Tariff

Consumption

slabs – Range in

kWh and billing

period

Approved Tariff Rate Subsidy

for

Energy

Charges

in Paise

per kWh

Tariff Rate Payable by

the Consumer

Fixed

Charges

(Rupees

per kW

per

month)

Energy

Charges in

Paise per

kWh

Fixed

Charges

(Rupees

per kW

per

month)

Energy

Charges in

Paise per

kWh

Low

Tension

Tariff II-C

0 to 60 units per

month or 0 to

120 units

bimonthly 50

500 250

50

250

Above 60 units

per month or

above 120 units

bimonthly

500 Nil 500

i. This tariff is applicable to actual places of public worship including Trichy

Rockfort temple, its environs and for the road and path ways leading to the

temple.

ii. The existing concessions to the actual places of worship as already notified

by GoTN having annual income less than Rs. 1000 shall be continued under

the same terms and conditions, until further Order of the Commission.



June 2013

6.17 Low Tension Tariff III-A (1):

Tariff Consumption slabs –

Range in kWh and

billing period

Tariff

Fixed Charges (Rupees

per kW per month)

Energy Charges in

Paise per kWh

Low Tension Tariff

III-A(1)

0 to 250 units per month

or

0 to 500 units bimonthly

15

350

From 251 units and

above units per month or

501 units and above

bimonthly

400

i. The connected load for supply under this tariff category shall not exceed 10

HP.

ii. This tariff is applicable to Cottage and tiny industries, Micro enterprises

engaged in the manufacture or production of goods pertaining to any

industries specified in the first schedule to Industries (Development and

Regulations) Act 1951 (Central Act 65 of 1951).

iii. The intending consumers applying for service connection under LT Tariff III

A (1) claiming to have established the micro enterprise engaged in the

manufacture or production of goods shall produce the cottage industries

certificates from the industrial department /acknowledgement issued by the

District Industries Centre under the Micro Small and Medium Enterprises

Development Act, 2006 (Act 27 of 2006 ) as proof for having filed

Entrepreneurs Memorandum for setting up of Micro Enterprises for

manufacture or production of goods with District Industries Centre under

whose jurisdiction the Enterprise is located.

iv. The existing consumers who are classified under LT Tariff III A (1) based on

the SSI / Tiny Industries Certificate may be continued to be charged under

the same tariff

v. This tariff is applicable to Small Gem cutting units, Waste land development,

laundry works and Common effluent treatment plants.

vi. This tariff is also applicable to Coffee grinding, Ice factory, Vehicle Body

building units, saw mills, rice mills, flour Mills, battery charging units and

Dairy units.

vii. This tariff is also applicable for sericulture, floriculture, horticulture,

mushroom cultivation, cattle farming, poultry & bird farming and fish/prawn

culture.



June 2013

viii. This tariff is also applicable for pumping of water/supply of water for the

purpose of “agriculture and allied activities” as specified in LT Tariff IV

provided that the applicant is unable to get supply under LT tariff IV as per

the seniority maintained specifically for the purpose of providing supply to

Agriculture under LT tariff IV. Such LT Tariff III-A(1) consumer is eligible

to apply for LT Tariff IV. As and when such applicant becomes eligible to

get regular supply under LT Tariff IV as per the specific seniority maintained

for that purpose by the licensee, the supply obtained under LT Tariff III-A(1)

for the specific purpose mentioned in this sub clause shall be converted into

LT tariff IV. Thereafter, the terms and conditions of LT Tariff IV only will

apply.

6.18 Low Tension Tariff III-A (2):

Tariff

Consumption

slabs – Range in

kWh and billing

period

Approved Tariff Rate Subsidy for

energy in

Paise/kWh

and fixed

charges in

Rs/kW per

month

Tariff Rate payable by

consumer

Fixed

Charges

(Rupees per

kW per

month)

Energy

Charges in

Paise per

kWh

Fixed

Charges

(Rupees per

kW per

month)

Energy

Charges in

Paise per kWh

(i) For consumer who consume up to 250 units per month (or) 500 units for two months

Low

Tension

Tariff

III-A (2)

0 to 250 units per

month or 0 to

500 units

bimonthly

50 450 450/kWh

Rs.50/kW/pm Nil Nil

ii) For consumers who consume 251 units and above per month (or) 501 units and above for two

months

0 to 250 units per

month or 0 to 500

units bimonthly

50

450 450/kWh

Rs.20/kW/pm

30

Nil

251 to 500 units

per month or

501 to 1000 units

bimonthly

500 300/kWh

Rs.20/kW/pm 200

501 to 750 units

per month or

1001 to 1500

units bimonthly

500 200/kWh

Rs.20/kW/pm 300

From 751 units

and above per

month or 1501

units and above

bimonthly

500 100/kWh

Rs.20/kW/pm 400

i. The connected load shall not exceed 10 HP under this category.

ii. The tariff is applicable to Power looms, Braided Cords Manufacturing and

related ancillary tiny industries engaged in warping, twisting, and winding.



June 2013

6.19 Low Tension Tariff III-B:

Tariff Fixed Charges

(Rupees per kW per

month)

Energy Charges in Paise per

kWh

Low Tension Tariff III-B 30 550

i. This tariff is applicable to all industries not covered under LT Tariff III A (1)

and III-A (2). All industries covered under LT Tariff III A (1) and III A (2)

shall also fall under this tariff category if the connected load of such

industries exceeds 10 HP.

ii. This tariff is also applicable to Welding sets irrespective of its capacity.

Supply to welding sets shall be charged 15% extra.

iii. This tariff is applicable to Information Technology services as defined in the

ICT Policy 2008 of Government of Tamil Nadu and amended from time to

time. The definition is reproduced below:

“IT services are broadly defined as systems integration, processing services,

information services outsourcing, packaged software support and

installation, hardware support and installation.”

Information Technology Services includes:

a) Systems integration includes :

1) Network Management Services

2) Applications Integration

b) Processing services includes:

1) Outsourced Services in Banking, HR, finance, Technology and

other areas

2) Outsourced Bank office support or Business transformation and

Process Consulting Services.

c) Information Services Outsourcing includes:

1) Outsourced Global Information Support Services

2) Knowledge Process Outsourcing

3) Outsourced Global Contact Centre Operations

4) Outsourced Process Consulting Services.



June 2013

d) Packaged Software Support and Installation includes:

1) Software Design and Development, Support and Maintenance

2) Application installation, support and maintenance

3) Application testing.

e) Hardware Support and Installation includes:

1) Technical and network operations support

2) Hardware installation, administration and management

3) Hardware infrastructure maintenance and support.

iv. The intending consumers applying for service connection under LT Tariff III

B claiming to have established the industries engaged in the manufacture or

production of goods shall produce certificate from the District Industries

centre.

6.20 Low Tension Tariff IV:

Tariff Description

Approved Tariff rate

Subsidy for Fixed

Charges / Energy

Charge

Tariff rate payable by consumer

Energy

charges in

Paise / kWh

Fixed

charges

(Rupees per

HP per

annum)

Fixed

Charges

(Rupees per

HP per

annum

Energy charges in

Paise / kWh

Low

Tension

Tariff IV

Till installation of

Energy Meter Nil 2500

Rs. 2500 per HP

per annum Nil Nil

On Installation of

Energy Meter 280 Nil 280 paise/kWh Nil Nil

i. This tariff is applicable for pumping of water/supply of water to all

agricultural and allied activities such as cultivation of food crops, vegetables,

seeds, trees and other plants. Sericulture, floriculture, horticulture,

mushroom cultivation, cattle farming, poultry and other bird farming,

fish/prawn culture carried out as allied activities of agriculture shall be

construed as agricultural activities.

ii. The services under this tariff shall be permitted to have lighting loads up to

50 watts per 1000 watts of contracted load subject to a maximum of 150

watts inclusive of wattage of pilot lamps for bonafide use .

iii. Subject to the limit of contracted load, the supply under this category can be

utilised for milking, sugar cane crushing, harvesting, stalk/chaff cutting,

thrashing and cleaning of agricultural produces, crane used for lifting

mud/silt from well by having a change over switch as approved and sealed

by the licensee. The change over switch is meant for using the supply either

to the pump set or to any one or more of the purposes mentioned in this

clause. Using supply both to the pump sets and to the other purpose(s) at the



June 2013

same time is strictly prohibited. The consumer shall abide by the safety

norms for any additional wiring for this purpose.

iv. This tariff is applicable irrespective of owner ship of land if the usage of

electricity is for agriculture and its allied activities.

v. Agricultural consumers shall be permitted to use the water pumped from the

well for bonafide domestic purposes in the farmhouse including for

construction of farm house and sheds for allied works.

vi. Supply for other purpose exceeding the limit permitted for lighting purpose

shall be provided only by separate service connections under appropriate LT

Tariff. Service connections for water pumping for non agricultural purpose

under appropriate tariff is permitted in the same well.

vii. This Tariff is applicable to pump sets of Tamil Nadu Agriculture university

and Research centres, Government Seed Farms, pump sets of Tamil Nadu

Forest department, Pump sets of Government coconut nurseries, Pump sets

of Government oil seed farms.

viii. Pumping and purifying of drainage water for the purpose of agriculture use.

6.21 Low Tension Tariff V:

Tariff Consumption slabs – Range in kWh

and billing period

Fixed Charges

(Rupees per kW

per month)

Energy

Charges

in Paise per

kWh

Low Tension

Tariff V

For consumer with consumption 50

units per month or 100 units bimonthly 60 430

For consumer with consumption above

50 units per month or above 100 units

bimonthly (For all units)

60 700

i. This tariff is applicable to consumers not categorized under LT IA, IB, IC,

IIA, IIB (1), II B (2), IIC, IIIA (I), III A (2), IIIB, IV and VI

ii. In respect of multi tenements/multi-storeyed buildings/residential complexes

where the number of flats/Tenements utilized for commercial and other

purposes exceeds 25% of the total built up area, the LT services relating to

common utilities such as common lighting, water supply, lift and other

facilities shall be charged under this tariff.



June 2013

6.22 Low Tension Tariff VI:

Tariff Fixed Charges (Rupees per

kW per month) Energy charges in paise/kWh

Low Tension

Tariff VI

300

1050

i. This tariff is applicable for supply of power for temporary activities,

construction of buildings and lavish illumination.

ii. The electricity supply for the additional construction beyond 2000 square

feet in the premises of an existing consumer shall be provided only through a

separate service connection and charged under this tariff.

iii. For temporary supply, the initial/in-principle approval for such construction

or to conduct such temporary activity obtained by the applicant from the

appropriate authority, wherever necessary, is adequate to effect the supply.

iv. In case of conversion of temporary supply into applicable permanent supply,

the same shall be done subject to compliance of codes/regulations/orders.

v. In case of lavish illumination, if the illumination is done frequently or

permanently, separate regular service connection shall be provided for lavish

illumination and charged under this tariff.

vi. If the supply is availed for short duration for the temporary

activity/illumination from an existing metered service connection, the

computation of energy/fixed charges for temporary illumination/activity

shall be done based on the connected load and duration of temporary supply.

Connected load shall be accounted in kW or part thereof. Fixed charges shall

be for a month or part thereof. Due credit for such computed energy, limited

to the meter consumption of the respective billing period, shall be given in

the energy recorded by the meter during the respective billing period for the

purpose of regular billing of the existing service connection. The consumer

shall abide by the safety norms for wiring.

vii. The following are considered as Lavish Illumination.

a) Illumination done for hoardings & advertisement boards.

b) Extra/additional illumination done outside the building and in the open areas

for parties/functions/occasions.



June 2013

c) Illumination done in the outer surface/outside the buildings/shops by display

lights, serial lamps, decorative lights, special effect lamps, neon lamps,

ornamental lamps, flood lights etc.

d) Temporary Illumination done for public meetings in pandals/shamianas, path

ways, streets and roads.

Explanation: The supply used for the purpose of indicating/displaying the name and

other details of the shop/buildings shall not be considered as lavish illumination.

6.23 Applicability of the Tariff Schedule

i. The above tariff schedule shall be read with the General Terms and

Conditions of Supply Code and Distribution code specified by the

Commission.

ii. Effecting change in tariff category for a consumer in accordance with this

order shall be the responsibility of TANGEDCO.

iii. The tariff schedule of this order shall be displayed prominently by the

licensee in all section and other offices of TANGEDCO.



June 2013

A7: SUMMARY OF DIRECTIVES

7.1 The Commission directs TANGEDCO

a) To file their Tariff Petition on a timely basis every year, as per the TNERC

Tariff Regulations.

b) To maintain quality of supply as specified in Tamil Nadu Electricity

Distribution Standards of Performance Regulations dated 21-07-2004.

c) To effectively monitor the on-going projects so that they are commissioned

without further delay. The projects which were scheduled to get commissioned

last year but have not been so far have to be commissioned at the earliest.

TANGEDCO should also ensure that the TANTRANSCO also simultaneously

completes all the associated transmission system for evacuation of power from

the generating stations which are getting commissioned during the year 2013-

14, so that power generated is transmitted up to the load centres without any

bottle necks. TANGEDCO should also ensure that the power should be

delivered to the consumption points by way of appropriate distribution

network. All these capacity addition as well as system strengthening plans will

have to be carried out through a well structured cohesive business plan and

detailed individual schemes catering to the need of the business plan. All such

plans and schemes shall be submitted to the Commission in accordance with

the Terms and Conditions of Tariff Regulations 2005, MYT Tariff

Regulations 2009, as well as Licensing Regulations 2005. The submission for

approval in this regard so far has been highly unsatisfactory. The Commission

has been addressing the utilities by way of letters as well as by way of

directions. The compliance to such letters and directions will have to be

serious and without fail.

d) To file separate petition for the approval of capital cost and tariff

determination of new power plants including hydro stations, within 90 days of

issuance of this Order.

e) To file the progress of the capital expenditure and capitalization on a quarterly basis.

f) The amount approved for R&M expenses should not be diverted for any other

purpose.

g) To comply with the Order on SMP 3 dated 4th June 2013 for accurate

measurement of T&D Loss and unmetered consumption.

h) To submit a time bound program for 100% metering at feeder level and at

distribution transformer level.



June 2013

i) To submit data on ToD consumption along with the subsequent Tariff

Application for all consumers where ToD meters have been installed. The

power purchase for meeting this demand should also be studied by

TANGEDCO, while taking into consideration the R&C measures in vogue.

j) To introduce kVAh billing for LT and HT consumers.

k) To provide the monthly energy demand and availability and its plan of

scheduling power in accordance to MoD on quarterly basis.

l) To take prior approval for purchasing energy from unapproved sources for

quantum and rate than that specified by the Commission in this Tariff Order.

m) To take prior approval for power procurement with variable cost more than

Rs. 3.50 from unapproved sources and sources not getting dispatched under

MoD, before purchasing energy.

n) To pay transmission charges determined by the Commission to

TANTRANSCO based on the allotted transmission capacity for FY 2013-14.

o) To file to the Commission its quarterly FPCA petitions starting this October,

to recover the actual cost of fuel incurred and the actual cost of power

purchase.

p) To start maintaining regulatory accounts for the purpose of ARR.

q) To comply with various provision of Energy Conservation Act 2001

pertaining to energy audit.

r) To submit a study report on computation of voltage wise ‘cost to serve’ (CoS)

along with the basis of allocation of different costs and losses to various

voltage levels. The Commission also directs TANGEDCO to submit the action

taken report within 90 days of the issuance of this order.

Sd/- Sd/-

(S. Nagalsamy) (K. Venugopal)

Member Member

(By Order of the Commission)

Sd/-

(S. GUNASEKARAN)

SECRETARY

Tamil Nadu Electricity

Regulatory Commission

t.p. no. 1 of 2013 dated 20-06-2013

Documents

distribution order

distribution tariff

electricity act

date of order

applicability of order

tariff filing

central act

d of subsection